12 U.S.C. § 1831f : US Code - Section 1831F: Brokered deposits

Search 12 U.S.C. § 1831f : US Code - Section 1831F: Brokered deposits

(a) In general
An insured depository institution that is not well capitalized
may not accept funds obtained, directly or indirectly, by or
through any deposit broker for deposit into 1 or more deposit
accounts.
(b) Renewals and rollovers treated as acceptance of funds
Any renewal of an account in any troubled institution and any
rollover of any amount on deposit in any such account shall be
treated as an acceptance of funds by such troubled institution for
purposes of subsection (a) of this section.
(c) Waiver authority
The Corporation may, on a case-by-case basis and upon application
by an insured depository institution which is adequately
capitalized (but not well capitalized), waive the applicability of
subsection (a) of this section upon a finding that the acceptance
of such deposits does not constitute an unsafe or unsound practice
with respect to such institution.
(d) Limited exception for certain conservatorships
In the case of any insured depository institution for which the
Corporation has been appointed as conservator, subsection (a) of
this section shall not apply to the acceptance of deposits
(described in such subsection) by such institution if the
Corporation determines that the acceptance of such deposits -
(1) is not an unsafe or unsound practice;
(2) is necessary to enable the institution to meet the demands
of its depositors or pay its obligations in the ordinary course
of business; and
(3) is consistent with the conservator's fiduciary duty to
minimize the institution's losses.
Effective 90 days after the date on which the institution was
placed in conservatorship, the institution may not accept such
deposits.
(e) Restriction on interest rate paid
Any insured depository institution which, under subsection (c) or
(d) of this section, accepts funds obtained, directly or
indirectly, by or through a deposit broker, may not pay a rate of
interest on such funds which, at the time that such funds are
accepted, significantly exceeds -
(1) the rate paid on deposits of similar maturity in such
institution's normal market area for deposits accepted in the
institution's normal market area; or
(2) the national rate paid on deposits of comparable maturity,
as established by the Corporation, for deposits accepted outside
the institution's normal market area.
(f) Additional restrictions
The Corporation may impose, by regulation or order, such
additional restrictions on the acceptance of brokered deposits by
any institution as the Corporation may determine to be appropriate.
(g) Definitions relating to deposit broker
(1) Deposit broker
The term "deposit broker" means -
(A) any person engaged in the business of placing deposits,
or facilitating the placement of deposits, of third parties
with insured depository institutions or the business of placing
deposits with insured depository institutions for the purpose
of selling interests in those deposits to third parties; and
(B) an agent or trustee who establishes a deposit account to
facilitate a business arrangement with an insured depository
institution to use the proceeds of the account to fund a
prearranged loan.
(2) Exclusions
The term "deposit broker" does not include -
(A) an insured depository institution, with respect to funds
placed with that depository institution;
(B) an employee of an insured depository institution, with
respect to funds placed with the employing depository
institution;
(C) a trust department of an insured depository institution,
if the trust in question has not been established for the
primary purpose of placing funds with insured depository
institutions;
(D) the trustee of a pension or other employee benefit plan,
with respect to funds of the plan;
(E) a person acting as a plan administrator or an investment
adviser in connection with a pension plan or other employee
benefit plan provided that that person is performing managerial
functions with respect to the plan;
(F) the trustee of a testamentary account;
(G) the trustee of an irrevocable trust (other than one
described in paragraph (1)(B)), as long as the trust in
question has not been established for the primary purpose of
placing funds with insured depository institutions;
(H) a trustee or custodian of a pension or profitsharing plan
qualified under section 401(d) or 403(a) of title 26; or
(I) an agent or nominee whose primary purpose is not the
placement of funds with depository institutions.
(3) Inclusion of depository institutions engaging in certain
activities
Notwithstanding paragraph (2), the term "deposit broker"
includes any insured depository institution that is not well
capitalized (as defined in section 1831o of this title), and any
employee of such institution, which engages, directly or
indirectly, in the solicitation of deposits by offering rates of
interest which are significantly higher than the prevailing rates
of interest on deposits offered by other insured depository
institutions in such depository institution's normal market area.
(4) Employee
For purposes of this subsection, the term "employee" means any
employee -
(A) who is employed exclusively by the insured depository
institution;
(B) whose compensation is primarily in the form of a salary;
(C) who does not share such employee's compensation with a
deposit broker; and
(D) whose office space or place of business is used
exclusively for the benefit of the insured depository
institution which employs such individual.
(h) Deposit solicitation restricted
An insured depository institution that is undercapitalized, as
defined in section 1831o of this title, shall not solicit deposits
by offering rates of interest that are significantly higher than
the prevailing rates of interest on insured deposits -
(1) in such institution's normal market areas; or
(2) in the market area in which such deposits would otherwise
be accepted.