Nutter Bank Report: December 2020 | Nutter McClennen & Fish LLP


Headlines

  1. FDIC Modernizes Brokered Deposit Rule and Amends Interest Rate Restrictions
  2. CFPB Expands the Definition of a Qualified Mortgage for Truth in Lending Purposes
  3. FDIC Adopts New Rules Regulating Parent Companies of Insured Industrial Banks
  4. Joint Guidance on Fintech Due Diligence Requirements for Community Banks to Come
  5. Other Developments: LIBOR Transition, Branch Applications, and SAR Filing Requirements

1. FDIC Modernizes Brokered Deposit Rule and Amends Interest Rate Restrictions

The FDIC has adopted a final rule that establishes new standards for determining whether deposits made through certain kinds of arrangements with third parties qualify as brokered deposits, such as those between banks and financial technology (“fintech”) companies. The final rule approved on December 15 also amends the methodology for calculating the interest rate restrictions that apply to less than well capitalized banks by defining the “National Rate” as the weighted average of rates paid by all banks and credit unions on a given deposit product based on each institution’s market share of domestic deposits. The final rule includes an exclusion from the definition of a brokered deposit for deposits placed by a third party that has an exclusive deposit placement arrangement with one bank. The final rule identifies several, specific business relationships involving the placement of a customer’s funds on deposit at a bank by the agent of the customer as meeting the primary purpose exception—which applies to exclude a deposit from the definition of a brokered deposit when the primary purpose of the agent’s business relationship with its customers is not the placement of funds with banks. Such “designated exceptions” in the final rule include, among others, agents that place customer funds into Health Savings Accounts for the primary purpose of paying for or reimbursing qualified medical expenses, property management firms that place customer funds into deposit accounts for the primary purpose of providing property management services, and agents that place customer funds into deposit accounts for the primary purpose of providing mortgage servicing. The final rule allows…

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