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Federal Legislative and Regulatory Issues
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Brokered Deposits/National Rate Cap
Brokered Deposits Banks that fall below regulatory requirements for being well capitalized are legislatively prohibited from renewing maturing brokered deposits or raising additional liquidity in the brokered deposit market. Brokered deposits have played a necessary and critical role as a safe and reliable source of funding for many Georgia banks. If the statute cannot be changed regarding brokered deposits, banks having to shed those deposits should be allowed to reduce their reliance over a longer period of time than simply upon renewal. If the FDIC could require an orderly reduction of brokered deposits of perhaps 10% per quarter or some other reasonable number, the impact would less. We have also heard concerns from members who are well within guidelines for being "well capitalized" about experiencing increased regulatory scrutiny over brokered deposit and wholesale funding sources such as Federal Home Loan Bank Advances. A well-managed bank balance sheet takes into consideration all funding sources for liquidity and net interest margin management, and reasonable levels of brokered deposits and wholesale sources for funding are important tools for ensuring safety, soundness and reasonable growth opportunities.
National Rate Caps Banks that are below "well capitalized" status must generally adhere to FDIC's published national averages for deposit rates. There is a waiver request process in place. Here's a link to questions and answers about the process, and a link to the current national rates. With questions, contact Joe Brannen, 404.420.2026, or Elizabeth Chandler 404.420.2027. And, remember, GBA's Strategic Partner, Ratewatch, offers GBA members discounts on important competitive interest rate data to help you with your pricing decisions and also to evaluate your local interest rate markets related to new FDIC rules for rate caps.
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GBA's professional staff represents the membership at the both the state and federal levels. Contact any of them with questions about issues:
Joe Brannen |
