|
[Main Tabs]
[Table of Contents - 4000]
[Index]
[Previous Page]
[Next Page]
[Search]
4000 - Advisory Opinions
Deposit Broker Statute: Whether Well Capitalized Insured
Depository Institutions May Accept Deposits From a Deposit Broker
Without Restriction
FDIC--94--49
September 9, 1994
Valerie J. Best, Counsel
I am writing in response to your recent telephone inquiry
concerning the deposit broker statute.
Insured depository institutions that are well capitalized may accept
deposits from a deposit broker without restriction. Further, insured
depository institutions that are adequately capitalized may accept
deposits from a deposit broker pursuant to a waiver from the FDIC. The
vast majority of insured depository institutions are well capitalized.
Consequently, the law does not prevent most insured depository
institutions from doing business with your company.
Some brokers express the concern that a few disreputable brokers may
conceal their status as brokers from troubled depository institutions.
It might help you to know that funds placed by deposit brokers can
often be detected even if it is not obvious on the face of the deposit
that it was placed by an intermediary. The FDIC staff has adopted the
position that troubled institutions that accept brokered deposits in
contravention of the law will be held responsible if they knew,
or had reason to know, that the funds were brokered
deposits. (FDIC Advisory Opinion
92--73.) Examiners scrutinize deposits that exhibit highly
volatile characteristics or that carry higher interest rates than
alternative sources, even if it is not obvious on the face of the
deposit instrument that the funds were placed by a deposit broker. In
some instances our examiners have contacted the deposit-owners in an
effort to uncover the involvement of deposit brokers.
{{2-28-95 p.4903}}
Some brokers also express the concern that troubled institutions are
obtaining out-of-market jumbo certificates of deposit through listing
services. FDIC staff has published a number of advisory letters
concerning listing services. (FDIC
Advisory Opinions 90--24,
92--50, among others.) These
letters set forth specific guidelines as to when a service will be
considered merely an information service (similar to the Dow
Jones Report) as opposed to a deposit broker. A service must
strictly adhere to each of these guidelines; if it does not, it will be
considered a deposit broker. It should be remembered that the brokered
deposit statute is not the only means available to the Federal banking
agencies to control volatile deposits. A troubled institution's use of
volatile deposits can be limited through a safety/soundness order
issued by the appropriate Federal banking agency. In addition, the
appropriate Federal banking agency can restrict a troubled
institution's activities pursuant to the "prompt corrective
action" statute (12 U.S.C.
1831o). An institution may be subject to criticism and/or
corrective action if its activities contravene general principles of
safety/soundness regardless of the source of deposits.
I hope you find the above information
helpful.
[Main Tabs]
[Table of Contents - 4000]
[Index]
[Previous Page]
[Next Page]
[Search]
|
