Updated Brokered Deposits FAQs & Exemption Thresholds Announced

Helping with brokered deposits and addressing concerns regarding statutory limitations, the Federal Deposit Insurance Corporation has released an updated version of its frequently asked questions (FAQs). Covered in the FAQs are examples of what is considered a deposit broker and exceptions to the limits on brokered deposits.

Causing destabilized financial and liquidity positions during continuous economic cycles, several banks have employed brokered deposits for funding unreliable or fast expansion of loan and investment portfolios. In addition, problematic financial institutions overusing and mishandling brokered deposits have added to bank failures and Deposit Insurance Fund losses.

Meanwhile, the Office of the Comptroller of the Currency, Consumer Financial Protection Bureau (“CFPB”) and Board of Governors of the Federal Reserve announced an increase in the exemption threshold for higher-priced mortgages susceptible to meeting special appraisal requirements. Reflecting inflation, the new threshold will be $25,500.

Also receiving adjustments are the asset size exemption thresholds for financial institutions under Regulation Z and Regulation C. As announced, the asset size threshold for banks exempt from creating an escrow account for higher-priced mortgages per Regulation Z increases from $2.028 billion to $2.060 billion. For banks that report under the Home Mortgage Disclosure Act and Regulation C, the asset size exemption threshold rises from $43 million to $44 million.

If you have questions concerning the revised FAQs and exemption thresholds, please contact a member of the Firm’s Financial Services Group.