On Wednesday, October 16, FDIC Chairman Jelena McWilliams spoke to an industry luncheon in Washington, DC. In response to a question from the audience concerning brokered deposits, Chairman McWilliams responded as follows:

The current staff interpretations of the brokered deposit regulations are overly complicated and need to be simplified.

She anticipates that the FDIC will propose revisions to the staff interpretations for public comment by the end of this year. She did not provide any further detail on what the revisions would include.

Our best guess is that the FDIC will move away from reliance on the staff interpretations that have been issued since 1992 in response to individual requests for guidance and attempt to implement a simplified approach by adopting formal agency guidance. This may result in a narrower interpretation of the term “deposit broker” and a broader interpretation of the various exceptions, such as the so-called “primary purpose” exception. We base this on the Chairman’s apparent desire to provide greater clarity and a 2017 staff interpretation that appears to give a broader reading to the primary purpose exception.

It is not clear whether the proposal will address the definition of “core” deposit, which currently excludes brokered deposits. Since that definition is not embodied in a regulation, public comment is not necessary to make revisions to that definition.

If you have any questions, please contact Paul Clark, Casey Jennings or Jessica Cohn at 202-737-8833.