[Federal Register Volume 74, Number 105 (Wednesday, June 3, 2009)]
[Rules and Regulations]
[Pages 26516-26521]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-12938]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 337


Interest Rate Restrictions on Insured Depository Institutions 
That Are Not Well Capitalized

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Final rule.

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SUMMARY: The FDIC is amending its regulations relating to the interest 
rate restrictions that apply to insured depository institutions that 
are not well

[[Page 26517]]

capitalized. Under the amended regulations, such insured depository 
institutions generally will be permitted to offer the ``national rate'' 
plus 75 basis points. The ``national rate'' will be defined, for 
deposits of similar size and maturity, as a simple average of rates 
paid by all insured depository institutions and branches for which data 
are available. For those cases in which the FDIC determines that the 
national rate as published on the FDIC's Web site does not represent 
the prevailing rate in a particular market, as indicated by available 
evidence, the depository institution will be permitted to offer the 
prevailing rate in that market plus 75 basis points. The purpose of 
this final rule is to clarify the interest rate restrictions for 
certain insured depository institutions and examiners.

DATES: The final rule is effective December 3, 2009.

FOR FURTHER INFORMATION CONTACT: Louis J. Bervid, Senior Examination 
Specialist, Division of Supervision and Consumer Protection, (202) 898-
6896 or [email protected]; or Christopher L. Hencke, Counsel, Legal 
Division, (202) 898-8839 or [email protected], Federal Deposit Insurance 
Corporation, 550 17th Street, NW., Washington, DC 20429.

SUPPLEMENTARY INFORMATION:

I. Section 29 of the Act

    Section 29 of the Federal Deposit Insurance Act (``FDI Act'') 
provides that an insured depository institution that is not well 
capitalized may not accept deposits by or through deposit brokers. See 
12 U.S.C. 1831f(a). Notwithstanding this prohibition, section 29 also 
provides that an adequately capitalized institution may accept brokered 
deposits if it obtains a waiver from the FDIC. See 12 U.S.C. 1831f(c). 
In contrast, an undercapitalized institution may not accept brokered 
deposits under any circumstances. See 12 U.S.C. 1831f(a) and (c).
    The purpose of section 29 generally is to limit the acceptance or 
solicitation of deposits by insured depository institutions that are 
not well capitalized. This purpose is promoted through two means: (1) 
The prohibition against the acceptance of brokered deposits by 
depository institutions that are less than well capitalized (as 
described above); and (2) certain restrictions on the interest rates 
that may be paid by such institutions. In enacting section 29, Congress 
added the interest rate restrictions to prevent institutions from 
avoiding the prohibition against the acceptance of brokered deposits by 
soliciting deposits internally through ``money desk operations.'' 
Congress viewed the gathering of deposits by weaker institutions 
through either third-party brokers or ``money desk operations'' as 
potentially an unsafe or unsound practice. See H.R. Conf. Rep. No. 101-
222 at 402-403 (1989), reprinted in 1989 U.S.C.C.A.N. 432, 441-42.
    Section 29 imposes different interest rate restrictions on 
different categories of insured depository institutions that are less 
than well capitalized. These categories are (1) adequately capitalized 
institutions with waivers to accept brokered deposits; (2) adequately 
capitalized institutions without waivers to accept brokered deposits; 
and (3) undercapitalized institutions. The statutory restrictions for 
each category are described in detail below.
    Adequately capitalized institutions with waivers to accept brokered 
deposits. Institutions in this category may not pay a rate of interest 
on deposits that ``significantly exceeds'' the following: ``(1) The 
rate paid on deposits of similar maturity in such institution's normal 
market area for deposits accepted in the institution's normal market 
area; or (2) the national rate paid on deposits of comparable maturity, 
as established by the [FDIC], for deposits accepted outside the 
institution's normal market area.'' 12 U.S.C. 1831f(e).
    In this category, an institution must adhere to (or not 
``significantly exceed'') the prevailing rates in its own ``normal 
market area'' only with respect to deposits accepted from that market 
area. For other deposits, the institution is permitted to offer (but 
not ``significantly exceed'') the ``national rate'' established by the 
FDIC. Thus, an institution in this category is not permitted to outbid 
local institutions for local deposits but is permitted to compete with 
non-local institutions for non-local deposits.
    Adequately capitalized institutions without waivers to accept 
brokered deposits. In this category, institutions may not offer rates 
that ``are significantly higher than the prevailing rates of interest 
on deposits offered by other insured depository institutions in such 
depository institution's normal market area.'' 12 U.S.C. 1831f(g)(3). 
In other words, the institution must adhere to the prevailing rates in 
its own ``normal market area'' for all deposits (whether local or non-
local). Thus, the institution will be unable to compete with non-local 
institutions for non-local deposits unless the rates in the 
institution's own ``normal market area'' are competitive with the non-
local rates.
    For institutions in this category, the statute restricts interest 
rates in an indirect manner. Rather than simply setting forth an 
interest rate restriction for adequately capitalized institutions 
without waivers, the statute defines the term ``deposit broker'' to 
include ``any insured depository institution that is not well 
capitalized * * * which engages, directly or indirectly, in the 
solicitation of deposits by offering rates of interest which are 
significantly higher than the prevailing rates of interest on deposits 
offered by other insured depository institutions in such depository 
institution's normal market area.'' 12 U.S.C. 1831f(g)(3). In other 
words, the depository institution itself is a ``deposit broker'' if it 
offers rates significantly higher than the prevailing rates in its own 
``normal market area.'' Without a waiver, the institution cannot accept 
deposits from a ``deposit broker.'' Thus, the institution cannot accept 
these deposits from itself. In this indirect manner, the statute 
prohibits institutions in this category from offering rates 
significantly higher than the prevailing rates in the institution's 
``normal market area.''
    Undercapitalized institutions. In this category, institutions may 
not offer rates ``that are significantly higher than the prevailing 
rates of interest on insured deposits (1) in such institution's normal 
market areas; or (2) in the market area in which such deposits would 
otherwise be accepted.'' 12 U.S.C. 1831f(h). Thus, for deposits in its 
own ``normal market area,'' an undercapitalized institution must offer 
rates that are not ``significantly higher'' than the local rates. For 
non-local deposits, the institution must offer rates that are not 
``significantly higher'' than either (1) the institution's own local 
rates; or (2) the applicable non-local rates. In other words, the 
institution must adhere to the prevailing rates in its own ``normal 
market area'' for all deposits (whether local or non-local) and also 
must adhere to the prevailing rates in the non-local area for any non-
local deposits. Thus, the institution will be unable to outbid non-
local institutions for non-local deposits even if the non-local rates 
are lower than the rates in the institution's own ``normal market 
area.''
    As described above, section 29 of the FDI Act imposes interest rate 
restrictions based on a depository institution's capital category (and 
whether the depository institution has obtained a waiver to accept 
brokered deposits). Also, section 29 authorizes the FDIC to ``impose, 
by regulation or order, such additional restrictions on the acceptance 
of brokered deposits by any institution as the [FDIC] may determine to 
be appropriate.'' 12 U.S.C. 1831f(f).

[[Page 26518]]

II. Section 337.6 of the FDIC's Regulations

    The FDIC has implemented section 29 of the FDI Act through section 
337.6 of the FDIC's regulations. See 12 CFR 337.6. Prior to its 
amendment through this final rule, section 337.6 added several 
significant definitions to the statutory rules. First, the ``national 
rate'' was defined. Second, the terms ``significantly exceeds'' and 
``significantly higher'' were defined. Third, the term ``market area'' 
was defined. Each of these definitions, and the reasoning behind the 
definitions, are discussed in greater detail below.
    The ``National Rate.'' In section 337.6, prior to the adoption of 
this final rule, the ``national rate'' was defined as follows: ``(1) 
120 percent of the current yield on similar maturity U.S. Treasury 
obligations; or (2) In the case of any deposit at least half of which 
is uninsured, 130 percent of such applicable yield.'' 12 CFR 
337.6(b)(2)(ii)(B). In defining the ``national rate'' in this manner, 
the FDIC relied upon the fact that such a definition is ``objective and 
simple to administer.'' 57 FR 23933, 23938 (June 5, 1992). By using 
percentages (120 percent or 130 percent of the yield on U.S. Treasury 
obligations) instead of a fixed number of basis points, the FDIC hoped 
to ``allow for greater flexibility should the spread to Treasury 
securities widen in a rising interest rate environment.'' Id. In 
deciding not to rely on published deposit rates, the FDIC offered the 
following explanation: ``The FDIC believes this approach would not be 
timely because data on market rates must be available on a 
substantially current basis to achieve the intended purpose of this 
provision and permit institutions to avoid violations. At this time, 
the FDIC has determined not to tie the national rate to a private 
publication. The FDIC has not been able to establish that such 
published rates sufficiently cover the markets for deposits of 
different sizes and maturities.'' Id. at 23939.
    ``Significantly Exceeds.'' Through section 337.6, the FDIC has 
provided that a rate of interest ``significantly exceeds'' another 
rate, or is ``significantly higher'' than another rate, if the first 
rate exceeds the second rate by more than 75 basis points. See 12 CFR 
337.6(b)(2)(ii), (b)(3)(ii) and (b)(4). In adopting this standard, the 
FDIC offered the following explanation: ``Based upon the FDIC's 
experience with the brokered deposit prohibitions to date, it is 
believed that this number will allow insured depository institutions 
subject to the interest rate ceilings * * * to compete for funds within 
markets, and yet constrain their ability to attract funds by paying 
rates significantly higher than prevailing rates.'' 57 FR at 23939.
    ``Market Area.'' In section 337.6, the term ``market area'' is 
defined as follows: ``A market area is any readily defined geographical 
area in which the rates offered by any one insured depository 
institution soliciting deposits in that area may affect the rates 
offered by other insured depository institutions operating in the same 
area.'' 12 CFR 337.6(b)(4). In adopting this definition, the FDIC 
offered the following explanation: ``Under the final rule, the market 
area will be determined pragmatically, on a case-by-case basis, based 
on the evident or likely impact of a depository institution's 
solicitation of deposits in a particular area, taking into account the 
means and media used and volume and sources of deposits resulting from 
such solicitation.'' 57 FR at 23939.
    These rules and definitions in section 337.6 have been difficult 
for insured depository institutions and examiners to apply. Prior to 
the adoption of this final rule, one issue was that section 337.6 
defined ``market area'' but did not define ``normal market area.'' In 
the absence of a definition, institutions and examiners struggled to 
determine ``normal market areas.'' \1\
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    \1\ Prior to 1992, the term ``normal market area'' was defined 
in a footnote in section 337.6. Under this definition, a depository 
institution's ``normal market area'' depended upon the institution's 
advertising practices in soliciting deposits. See 12 CFR 
337.6(a)(1)(ii) (1992) (footnote 11).
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    Another issue was that the definition of the ``national rate'' 
became outdated. As discussed above, prior to the adoption of this 
final rule, the ``national rate'' was defined as ``120 percent of the 
current yield on similar U.S. Treasury obligations'' (or 130 percent in 
the case of a deposit ``at least half of which is uninsured''). 12 CFR 
337.6(b)(2)(ii)(B). For many years, this definition functioned well 
because rates on Treasury obligations tracked closely with rates on 
deposits. At present, however, the rates on certain Treasury 
obligations are low compared to deposit rates. Consequently, the 
``national rate'' as defined in the FDIC's regulations has been 
artificially low. By setting a low rate, the FDIC's regulations 
required some insured depository institutions to offer unreasonably low 
rates on some deposits, thereby restricting access even to market-rate 
funding.

III. The Proposed Rule

    In response to the issues discussed above, the FDIC sought public 
comments on a proposed rule. See 74 FR 5904 (February 3, 2009). Through 
the proposed rule, the FDIC addressed two basic problems: (1) The 
obsolescence of the FDIC's definition of the ``national rate''; and (2) 
the difficulty experienced by insured depository institutions and 
examiners in determining prevailing rates in ``normal market areas'' 
and other market areas.
    In response to the first problem, the FDIC proposed to redefine the 
``national rate'' as ``a simple average of rates paid by all insured 
depository institutions and branches for which data are available.'' In 
other words, the FDIC proposed to sever the connection between the 
national rate and the yield on U.S. Treasury obligations.
    In response to the second problem, the FDIC proposed to create a 
presumption that the prevailing rate in any market would be the 
national rate (as defined above). An insured depository institution 
could rebut this presumption by presenting evidence to the FDIC that 
the prevailing rate in a particular market is higher than the national 
rate. If the FDIC agreed with this evidence, the institution would be 
permitted to pay as much as 75 basis points above the local prevailing 
rate.

IV. The Comments

    In response to the publication of the proposed rule, the FDIC 
received twenty comments from insured depository institutions, banking 
associations and bank service providers. Some commenters urged the FDIC 
to adopt tougher interest rate restrictions on insured depository 
institutions that are not well capitalized. They expressed concern that 
such institutions, through high interest rates, are driving up costs 
for healthy banks. Most commenters, however, urged the FDIC to provide 
insured depository institutions with greater flexibility in offering 
interest rates.
    The commenters did not dispute that the ``national rate'' has 
become outdated. Also, they generally supported the concept of allowing 
an insured depository institution to submit evidence that the national 
rate, in a particular market, does not represent the actual prevailing 
rate. In regard to determining the prevailing or applicable rate in a 
particular market, the commenters made various suggestions including 
the following:
     A bank should be free to choose any of the following rates 
as the applicable prevailing rate: (1) The national rate; (2) the State 
rate; (3) the ``metropolitan statistical area'' or ``MSA'' rate; or (4) 
the Internet rate (for Internet banks).

[[Page 26519]]

     The prevailing rate should be based upon the rates offered 
by insured depository institutions but also should be based upon the 
rates offered by credit unions (and perhaps other entities not insured 
by the FDIC).
     The prevailing rate should be based upon the highest rates 
in a market. The lowest rates should not be considered because banks 
offering low rates are not competing for deposits.
     Different rates should apply to different deposit 
products. For example, time deposits should not be compared to deposits 
without maturity dates. Further, deposits without maturity dates should 
be divided into smaller categories based on distinct features (for 
example, ``money market deposit accounts'' or ``MMDAs'' could be 
separated from ``negotiable order of withdrawal'' or ``NOW'' accounts).
     Certain types of deposit accounts (such as transaction 
accounts) should be exempt from any interest rate restrictions because 
such accounts represent core deposits.

V. The Final Rule

    After considering the comments, the FDIC has decided to adopt 
certain amendments to section 337.6. Each of these amendments is 
discussed in turn below.
    Paragraph (a)(5)(iii). Prior to the adoption of the final rule, 
this paragraph provided that the term ``deposit broker'' includes ``any 
insured depository institution that is not well capitalized, and any 
employee of any such insured depository institution, which engages, 
directly or indirectly, in the solicitation of deposits by offering 
rates of interest (with respect to such deposits) which are 
significantly higher than the prevailing rates of interest on deposits 
offered by other insured depository institutions in such depository 
institution's normal market area.'' This provision in the regulations 
is based upon corresponding language in the statute itself. See 12 
U.S.C. 1831f(g)(3). As previously discussed, the effect of this 
provision is to prohibit certain insured depository institutions 
(adequately capitalized institutions without waivers to accept brokered 
deposits) from offering rates of interest significantly higher than the 
prevailing rates in the institution's normal market area.
    Through the proposed rule, the FDIC proposed adding the following 
sentence: ``For purposes of this paragraph, the prevailing rates of 
interest in such depository institution's normal market area shall be 
deemed to be the national rate as defined in paragraph (b)(2)(ii)(B) 
unless the FDIC determines, based on available evidence, that the 
prevailing rates differ from the national rate.'' Through the final 
rule, the FDIC has adopted the substance of this provision but the FDIC 
has decided not to add this sentence to paragraph (a)(5)(iii). Rather, 
the FDIC has moved this provision to new paragraph (e) (discussed 
below).
    Paragraph (b)(2)(ii)(B). As amended by the final rule, this 
paragraph defines the ``national rate'' as follows: ``[T]he national 
rate shall be a simple average of rates paid by all insured depository 
institutions and branches for which data are available. This rate shall 
be determined by the FDIC.''
    In adopting this definition, the FDIC does not mean to prevent 
insured depository institutions from offering evidence that the 
prevailing rate in a particular market differs from the national rate. 
On the contrary, the FDIC will allow insured depository institutions to 
submit such evidence under new paragraph (e) (discussed below). The 
purpose of this paragraph (b)(2)(ii)(B) is simply to provide insured 
depository institutions and examiners with a clear ``safe harbor'' that 
can be used in determining permissible rates. This ``safe harbor'' 
(i.e., the rate published by the FDIC) will be based upon the rates 
offered by all insured depository institutions and branches.
    The FDIC intends to publish or post the national rate on its Web 
site. In publishing the national rate, the FDIC would publish separate 
rates for deposits of different amounts and maturities. In addition, 
the FDIC might publish separate rates for different types of deposit 
products. For example, the FDIC might publish a rate for NOW accounts 
and a separate rate for MMDAs.
    Some commenters suggested that the FDIC's definition of the 
``national rate'' (based on all insured depository institutions and 
branches) is too strict. These commenters argued that the FDIC, in 
calculating a national average, should use no institutions or branches 
except those offering the highest rates.
    For two reasons, the FDIC has not adopted this suggestion. First, 
the exclusion of the rates offered by some insured depository 
institutions and branches would result in a national rate that does not 
represent a true average national rate. On the contrary, the exclusion 
of low rates would produce a national rate that exceeds the true 
average. Such a rate would fail to serve as a meaningful restriction on 
insured depository institutions that are not well capitalized. Second, 
for cases in which the FDIC's published national rate does not 
represent the actual prevailing rate in a particular market, the FDIC 
believes that insured depository institutions will be given a fair 
opportunity to establish the prevailing rate through new paragraph (e) 
(discussed below).
    Paragraph (b)(4). Prior to the adoption of the final rule, this 
paragraph defined ``market area.'' Also, this paragraph set forth a 
procedure (interpolation) for determining average or effective yields 
on time deposits with odd maturities in a particular market area. 
Through the final rule, the substance of these provisions has not been 
changed but the provisions have been moved to new paragraph (e) 
(discussed below).
    By its own terms, paragraph (b)(4) applied solely to the interest 
rate restrictions applicable to (1) adequately capitalized insured 
depository institutions with waivers to accept brokered deposits (see 
paragraph (b)(2)(ii)(A)); and (2) undercapitalized insured depository 
institutions (see paragraph (b)(3)(ii)). It did not apply to the 
interest rate restrictions applicable to adequately capitalized insured 
depository institutions without waivers to accept brokered deposits 
(see paragraph (a)(5)(iii)). This limitation on paragraph (b)(4) was 
illogical. For this reason, through the final rule, the FDIC has 
removed paragraph (b)(4) and moved its provisions to new paragraph (e). 
The latter paragraph is discussed below.
    Paragraph (e). Under new paragraph (e), ``a presumption shall exist 
that the effective yield in the relevant market is the national rate * 
* * unless the FDIC determines, based on available evidence, that the 
effective yield differs from the national rate.'' Under this provision, 
an institution not choosing to avail itself of the national rate will 
be able to assert it is operating in a high-rate environment and 
provide evidence of such to the appropriate FDIC regional office. In 
evaluating this evidence, the FDIC may use segmented market rate 
information (for example, evidence by State, county or MSA). Also, the 
FDIC may consider evidence as to the rates offered by credit unions but 
only if the insured depository institution competes directly with the 
credit unions in the particular market. Finally, the FDIC may consider 
evidence that the rates on certain deposit products differ from the 
rates on other products. For example, in a particular market, the rates 
on NOW accounts might differ from the rates on MMDAs. NOW accounts 
might be distinguished from MMDAs because the two types of accounts are 
subject to different legal requirements. See 12 U.S.C. 1832 and 12 CFR 
204.2(e)(2) (dealing with NOW accounts); 12 CFR 204.2(d)(2) (dealing 
with MMDAs).

[[Page 26520]]

    The FDIC does not intend, however, to provide the insured 
depository institution (being less than well capitalized) with complete 
freedom in determining the prevailing rates on various deposit 
products. For example, the FDIC will not consider alleged distinctions 
between the MMDAs offered by one insured depository institution and the 
MMDAs offered by other insured depository institutions in the same 
market. Such an approach would enable an insured depository 
institution, by adding special features to its deposit products, to 
avoid comparison to the interest rates offered by other insured 
depository institutions located in the same area. This result would be 
inconsistent with the purpose of section 29 of the FDI Act, which is 
meant to restrict the interest rates that can be offered by insured 
depository institutions that are not well capitalized.
    Though the final rule revises the definition of the ``national 
rate'' and changes the methodology for determining prevailing rates in 
different markets, the final rule does not change the meaning of 
``significantly exceeds'' or ``significantly higher.'' Under the 
amended regulations, an interest rate will continue to be 
``significantly higher'' than a second rate if the first rate exceeds 
the second rate by more than 75 basis points. Most of the commenters 
did not object to this standard.
    The final rule will not become effective until six months after the 
date of publication in the Federal Register. The FDIC believes that a 
delayed effective date may be necessary to enable insured depository 
institutions to adjust to the new rules. Notwithstanding this delayed 
effective date, the FDIC intends to post national average rates on its 
Web site immediately. These rates may assist insured depository 
institutions in complying with the current rules as well as the new 
rules. Indeed, under either set of rules, the staff believes that the 
national average rates may represent the prevailing rates in many 
market areas. For this reason, the FDIC would not object to the 
immediate use of the posted rates by an insured depository institution 
that is not well capitalized though such use will not be mandatory.

VI. Conclusion

    The purpose of the final rule is to provide examiners and insured 
depository institutions that are not well capitalized with a clear 
method for determining the highest permissible interest rates. Under 
the amended regulations, an insured depository institution will be able 
to ascertain the ``national rate'' and the applicable rate cap by 
checking the FDIC's Web site. In those cases in which the depository 
institution believes that the average rate in a relevant market exceeds 
the national rate, the depository institution will be permitted to 
offer evidence of such higher rate. Assuming the evidence confirms the 
higher rate, the institution will be permitted to offer rates up to the 
higher rate cap.

Community Development and Regulatory Improvement Act

    The final rule does not impose any new reporting or disclosure 
requirements on insured depository institutions under the Riegle 
Community Development and Regulatory Improvement Act.

Paperwork Reduction Act

    The final rule does not involve any new collections of information 
under the Paperwork Reduction Act (44 U.S.C. 3501 et seq.). 
Consequently, no information collection has been submitted to the 
Office of Management and Budget for review.

Regulatory Flexibility Act

    Pursuant to section 605(b) of the Regulatory Flexibility Act (5 
U.S.C. 605(b)), the FDIC certifies that the final rule will not have a 
significant impact on a substantial number of small entities. This 
conclusion is based upon the fact that the final rule merely clarifies 
the interest rate restrictions set forth in the Federal Deposit 
Insurance Act. The final rule does not impose any new restrictions. 
Indeed, under the final rule, the burden of determining compliance with 
the interest rate restrictions will be eased because insured depository 
institutions that are not well capitalized (including any small 
entities) can rely on the ``national rate'' determined by the FDIC. In 
those cases in which the insured depository institution believes that 
the rates in its ``normal market area'' exceed the ``national rate,'' 
the final rule permits the institution to offer evidence of the 
``normal market area'' rates just as the former rules permitted 
institutions to offer evidence of ``normal market area'' rates.

Impact on Families

    The FDIC has determined that the final rule will not affect family 
well-being within the meaning of section 654 of the Treasury and 
General Government Appropriations Act, enacted as part of the Omnibus 
Consolidated and Emergency Supplemental Appropriations Act of 1999 
(Pub. L. 105-277, 112 Stat. 2681).

Plain Language

    Section 722 of the Gramm-Leach-Bliley Act, Public Law 106-102, 113 
Stat. 1338, 1471 (Nov. 12, 1999), requires the Federal banking agencies 
to use plain language in all proposed and final rules published after 
January 1, 2000. The FDIC requested comments on this issue but received 
none.

List of Subjects in 12 CFR Part 337

    Banks, Banking, Reporting and recordkeeping requirements, Savings 
associations, Securities.


0
For the reasons stated above, the Board of Directors of the Federal 
Deposit Insurance Corporation amends part 337 of title 12 of the Code 
of Federal Regulations as follows:

PART 337--UNSAFE AND UNSOUND BANKING PRACTICES

0
1. The authority citation for part 337 is revised to read as follows:

    Authority: 12 U.S.C. 375a(4), 375b, 1816, 1818(a), 1818(b), 
1819, 1820(d)(10), 1821(f), 1828(j)(2), 1831, 1831f.


0
2. In Sec.  337.6, paragraph (b)(2)(ii)(B) is revised, paragraph (b)(4) 
is removed, and paragraph (e) is added to read as follows:


Sec.  337.6  Brokered deposits.

* * * * *
    (b) * * *
    (2) * * *
    (ii) * * *
    (B) The national rate paid on deposits of comparable size and 
maturity for deposits accepted outside the institution's normal market 
area. For purposes of this paragraph (b)(2)(ii)(B), the national rate 
shall be a simple average of rates paid by all insured depository 
institutions and branches for which data are available. This rate shall 
be determined by the FDIC.
* * * * *
    (e) A market is any readily defined geographical area in which the 
rates offered by any one insured depository institution soliciting 
deposits in that area may affect the rates offered by other insured 
depository institutions operating in the same area. For purposes of 
this Sec.  337.6, a presumption shall exist that the prevailing rate or 
effective yield in the relevant market is the national rate as defined 
in paragraph (b)(2)(ii)(B) of this section unless the FDIC determines, 
based on available evidence, that the effective yield differs from the 
national rate. The effective yield on a deposit with an odd maturity 
shall be determined by interpolating between the yields offered by 
other insured depository institutions on

[[Page 26521]]

deposits of the next longer and shorter maturities offered in the 
market.

    Dated at Washington, DC, this 29th day of May, 2009.

    Authorized to be published in the Federal Register by Order of 
the Board of Directors of the Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. E9-12938 Filed 6-2-09; 8:45 am]
BILLING CODE 6714-01-P