[Federal Register: June 11, 2009 (Volume 74, Number 111)]
[Rules and Regulations]
[Page 27679-27683]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11jn09-1]
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Rules and Regulations
Federal Register
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[[Page 27679]]
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 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 on January 1, 2010.
FOR FURTHER INFORMATION CONTACT: Louis J. Bervid, Senior Examination
Specialist, Division of Supervision and Consumer Protection, (202) 898-
6896 or lbervid@fdic.gov; or Christopher L. Hencke, Counsel, Legal
Division, (202) 898-8839 or chencke@fdic.gov, 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
[[Page 27680]]
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).
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
[[Page 27681]]
(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).
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
[[Page 27682]]
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) seemed out of place. 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 prevailing rate or effective yield in the relevant market is
the national rate * * * unless the FDIC determines, based on available
evidence, that the effective yield in that market 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. New paragraph (e) specifies that
the FDIC, in evaluating such evidence, may consider 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
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).
The FDIC does not intend, however, to provide the insured
depository institution (being less than well capitalized) with complete
flexibility 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 January 1, 2010,
somewhat over 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.\2\ 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.
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\2\ The delayed effective date also is consistent with the goals
of section 302 of the Riegle Community Development and Regulatory
Improvement Act of 1994, which generally requires the Federal
banking agencies to make new rules or rule changes that impose
additional reporting, disclosure or other requirements effective on
the first day of a calendar quarter. Public Law 103-325, 108 Stat.
2214-15.
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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.
Riegle 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.
Small Business Regulatory Enforcement Fairness Act
The Office of Management and Budget has determined that the final
rule is not a ``major rule'' within the meaning of the relevant
sections of the Small Business Regulatory Enforcement Fairness Act of
1996 (5 U.S.C. 801 et seq.). The final rule clarifies the interest rate
restrictions set forth in the Federal Deposit Insurance Act. The final
rule does not impose any new restrictions. On the contrary, through the
final rule, the FDIC will ease the burden of complying with the
statutory interest rate restrictions by allowing insured depository
institutions that are not well capitalized to rely on the ``national
rate'' determined by the FDIC. As required by law, the FDIC will file
the appropriate reports with Congress and the General
[[Page 27683]]
Accounting Office so that the final rule may be reviewed.
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:
0
a. Paragraph (b)(2)(ii)(B) is revised to read as set forth below.
0
b. Paragraph (b)(4) is removed.
0
c. Paragraph (e) is added to read as set forth below.
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. 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
deposits of the next longer and shorter maturities offered in the
market. 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, in its sole discretion based on available
evidence, that the effective yield in that market differs from the
national rate. Evidence of the effective yield in a particular market
may include (but is not limited to) the following:
(1) Evidence as to the rates paid by other insured depository
institutions in the same State, county or metropolitan statistical area
(though the FDIC shall not be obligated to recognize each State, county
or metropolitan statistical area as a separate market area);
(2) Evidence as to the rates paid by credit unions in the same
market area if the FDIC determines that the insured depository
institution competes directly with these credit unions; and
(3) Evidence as to the different rates paid on different deposit
products in the same market area (though the FDIC shall not be
obligated to recognize all alleged distinctions among various deposit
products). (Example: For a particular market, evidence exists that the
rates on money market deposit accounts (MMDAs) differ from the rates on
negotiable order of withdrawal (NOW) accounts. MMDAs are
distinguishable from NOW accounts in that the two types of accounts are
subject to different legal requirements. Under these circumstances, for
this market, the FDIC could recognize that the prevailing rate on MMDAs
is different than the prevailing rate on NOW accounts.)
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. E9-13748 Filed 6-10-09; 8:45 am]
BILLING CODE 6714-01-P