Updated Brokered Deposit Guidance: FDIC Revises Frequently Asked Questions on Identifying, Accepting and Reporting Brokered Deposits

Sullivan & Cromwell LLP - July 5, 2016

On June 30, 2016, the Federal Deposit Insurance Corporation (the “FDIC”) issued a Financial Institutions Letter (FIL-42-2016) providing revised guidance regarding brokered deposits in the form of Frequently Asked Questions (the “2016 FAQs”).  The 2016 FAQs followed the FDIC’s issuance of brokered deposit FAQs in January 2015, which created substantial industry concerns regarding the breadth of the definition of “brokered deposits,” and the issuance of “updated” FAQs in November 2015 combined with a request for comment.  The 2016 FAQs retained all of the proposed FAQs issued for comment, but with some key clarifications and new FAQs regarding, among other matters, application of exceptions to the “deposit broker” definition, duration of brokered status and implications of Prompt Correction Action (“PCA”) on retention of brokered deposits.  These revisions should alleviate a number of the industry concerns with the January 2015 FAQs.