FDIC issues interim final rule implementing 21st Century ROAD to Housing Act reciprocal deposit provisions

On August 27, the FDIC Board of Directors approved an interim final rule, effective September 1, implementing section 902 of the 21st Century ROAD to Housing Act (previously covered by InfoBytes here), which amended the statutory framework governing reciprocal deposits. The interim final rule raises the amount of reciprocal deposits an 'agent institution' may exclude from treatment as brokered deposits by replacing the prior general cap — the lesser of $5 billion or 20 percent of total liabilities — with a new tiered liability-based calculation: 50 percent of the first $1 billion in total liabilities, 40 percent of total liabilities between $1 billion and $10 billion, and 30 percent of total liabilities between $10 billion and approximately $96.3 billion, up to a maximum exclusion of $30 billion. The interim final rule also broadens the definition of 'agent institution' by expanding the first prong from institutions with a CAMELS composite rating of '1' or '2' to include institutions rated '3,' provided they remain well capitalized. In addition to these statutory changes, the interim final rule provides several clarifications regarding the operation of the reciprocal deposits framework. These include guidance on when an institution 'receives' nonmaturity reciprocal deposits for purposes of the special cap, when an institution requalifies as an agent institution following a supervisory rating change or capital-category change, and the FDIC's plans to coordinate with the FFIEC to update Call Report instructions to reflect the new framework. Comments on the interim final rule must be submitted by October 1. [View source.]