FDIC Extends Comment Period for Proposed Rule on Brokered Deposits

On October 8, 2024, the Federal Deposit Insurance Corporation (“FDIC”) announced an extension to the comment period on its notice of proposed rulemaking (“NPR”) regarding brokered deposits. Originally, the comment period for the PR was to close on October 22, 2024, but is now planned to close on November 21, 2024.

The original NPR, “Unsafe and Unsound Banking Practices: Brokered Deposits Restrictions,” was published by the FDIC this past August. The NPR would revise 12 C.F.R. Parts 303 and 337 with a goal of improving the analysis of “deposit brokers” and ensure accurate reporting of such deposits.

The NPR seeks to achieve these goals with a few key revisions, among others. First, the FDIC is proposing to update the definition of a “deposit broker, ” particularly with respect to the analysis of the “primary purpose” exception to the definition, which is critical for anyone trying to avoid brokered deposit classification. Second, the NPR continues to exempt well-capitalized institutions from brokered deposit restrictions, but will generally enhance the rules for other insured depository institutions to “strengthen the safety and soundness of the banking system by ensuring that less than well-capitalized institutions are restricted from relying on brokered deposits to support risky, rapid growth.”

The NPR can be found at https://www.federalregister.gov/documents/2024/08/23/2024-18214/unsafe-and-unsound-banking-practices-brokered-deposits-restrictions.

Changes to Bank Merger Review Process Announced by Federal Agencies

On September 17, 2024, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) separately finalized previously proposed policy statements on their review of bank mergers under the Bank Merger Act (BMA) and its implementing regulations. Noticeably missing in action was the Board of Governors of the Federal Reserve System, who has not issued any policy statement that would update or amend its review of bank mergers. Also on September 17, 2024, the Department of Justice (DOJ) formally withdrew from the 1995 joint Bank Merger Guidelines and issued commentary on its plans to transition to the 2023 Merger Guidelines for its review of bank mergers.

Read the full Alert on the Duane Morris LLP website.

Webinar: The FDIC Loss-Share Program: How to Extract Every Last Dollar

Duane Morris LLP and FTI Consulting invite you to our webinar, The FDIC Loss-Share Program: How to Extract Every Last Dollar, to be held on Thursday, March 2, 2017  from 11:00 a.m. to 12:00 p.m. Central time.

Duane Morris lawyers and FTI Consulting professionals will discuss strategies that can help banks maximize recoveries under the FDIC Loss-Share Program. Generally, the FDIC will reimburse 80 percent of losses for a covered asset, while the acquiring bank absorbs 20 percent of the loss, provided certain conditions and reporting requirements are met. Our program will outline the common challenges that banks face with the FDIC Loss-Share Program and provide practical solutions that increase loss-sharing recoveries.

Please visit the event page on the Duane Morris website for more information or to register online.

Changing Seasons of FDIC Shared-Loss Programs

As we head into autumn, many of us change our seasonal wardrobes, replace the filters in our home heating/cooling systems, swap our summer screens for winter’s storm windows and ready our vehicles for winter. Bankers participating in a Federal Deposit Insurance Corporation (FDIC) shared-loss program should consider adding one more seasonal item to their list—a check-up on the status of your shared-loss participation, particularly your commercial shared-loss program. Many banks acquired assets and deposit accounts of failed institutions in the years following the Great Recession via purchase and assumption agreements entered into with the FDIC. Those agreements included an eight-year commercial shared-loss component, whereby the acquiring bank shares losses with the FDIC during the first five years and then shares recoveries for the remaining three years of the term.

To read the full text of the Alert, please visit the Duane Morris website.

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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