[Federal Register Volume 84, Number 72 (Monday, April 15, 2019)]
[Rules and Regulations]
[Pages 15095-15096]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-07048]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Parts 327 and 337

RIN 3064-AE89


Limited Exception for a Capped Amount of Reciprocal Deposits From 
Treatment as Brokered Deposits; Technical Amendment

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Final rule; technical amendment to preamble.

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SUMMARY: The FDIC is making technical amendments to the preamble of a 
final rule published in the Federal Register on February 4, 2019. The 
final rule relates to a limited exception for a capped amount of 
reciprocal deposits from treatment as brokered deposits. As published, 
several industry participants raised concerns about the meaning of a 
sentence in the preamble of the final rule. To avoid potential 
confusion, the FDIC is amending the language, as explained below.

DATES: The technical amendments are effective April 15, 2019.

FOR FURTHER INFORMATION CONTACT: Legal Division: Vivek V. Khare, 
Counsel, (202) 898-6847, [email protected]; Thomas Hearn, Counsel, (202) 
898-6967, [email protected]. Division of Risk Management Supervision: 
Thomas F. Lyons, Chief, Policy and Program Development, (202) 898-6850, 
[email protected].

SUPPLEMENTARY INFORMATION:

Technical Amendments

    On December 18, 2018, the FDIC adopted a final rule relating to the 
treatment of reciprocal deposits. The final rule was published in the 
Federal Register on February 4, 2019 (84 FR 1346). Several industry 
participants

[[Page 15096]]

have raised concerns about whether a sentence in the preamble of the 
final rule could be read as changing existing interpretations related 
to accepting or receiving deposits. The sentence is italicized below: 
\1\
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    \1\ 84 FR 1346, 1349 (February 4, 2019).

    The FDIC recognizes that the statute only limits the amount of 
reciprocal deposits an institution may ``receive'' in order to be 
considered an agent institution. Thus, an institution that is less 
than well capitalized or not well rated will still qualify as an 
agent institution if it holds a level of reciprocal deposits above 
the special cap, as long as (1) such deposits were received before 
the institution became less than well capitalized or not well rated, 
(2) such deposits are time deposits,\28\ and (3) the institution 
satisfies all other qualifications necessary to be an agent 
institution. For example, an institution that is well capitalized 
but no longer well rated could continue to be an agent institution 
if it holds reciprocal time deposits that it received prior to its 
rating downgrade until those time deposits mature or roll off, but 
would no longer be an agent institution if it renewed or rolled over 
such deposits and doing so caused the total amount of reciprocal 
deposits to exceed the special cap. In this case, once the 
institution receives reciprocal deposits in excess of its special 
cap, it is no longer an agent institution. If an institution is not 
an agent institution, all of its reciprocal deposits should be 
reported as brokered deposits.
* * * * *
    \28\ Transactional reciprocal deposits are viewed as being 
received daily.

    The FDIC does not intend this preamble language to change existing 
interpretations related to accepting or receiving deposits. Therefore, 
in an effort to avoid confusion, the FDIC is deleting the sentence in 
question along with its corresponding footnote and, amending the 
sentence that immediately follows. The revised paragraph reads as 
follows:

    The FDIC recognizes that the statute only limits the amount of 
reciprocal deposits an institution may ``receive'' in order to be 
considered an agent institution. To take a simple example, an 
institution that is well capitalized but no longer well rated could 
continue to be an agent institution if it holds reciprocal 
certificate of deposits that it received prior to its rating 
downgrade until those certificate of deposits mature or roll off, 
but would no longer be an agent institution if it renewed or rolled 
over such deposits and doing so caused the total amount of 
reciprocal deposits to exceed the special cap. In this case, once 
the institution receives reciprocal deposits in excess of its 
special cap, it is no longer an agent institution. If an institution 
is not an agent institution, all of its reciprocal deposits should 
be reported as brokered deposits.

    As discussed above, these changes to the preamble text are 
technical, and do not change the rule text. Accordingly, the FDIC finds 
that notice and comment procedures are unnecessary. Further, because 
the changes are technical, delaying the effective date would serve no 
purpose. Therefore, these changes will be effective upon publication.
    For convenient reference, the FDIC is posting the revised preamble 
and final rule in their entirety on its website.
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    Dated at Washington, DC, on March 8, 2019.

    By Order of the Board of Directors.

Federal Deposit Insurance Corporation.
Valerie Best,
Assistant Executive Secretary.
[FR Doc. 2019-07048 Filed 4-12-19; 8:45 am]
BILLING CODE 6714-01-P