§ 1831f. — Brokered deposits.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC1831f]
TITLE 12--BANKS AND BANKING
CHAPTER 16--FEDERAL DEPOSIT INSURANCE CORPORATION
Sec. 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.
(Sept. 21, 1950, ch. 967, Sec. 2[29], as added Pub. L. 101-73, title II,
Sec. 224(a), Aug. 9, 1989, 103 Stat. 273; amended Pub. L. 102-242, title
III, Sec. 301(a), (c), Dec. 19, 1991, 105 Stat. 2343, 2345; Pub. L. 102-
550, title XVI, Sec. 1605(a)(1), Oct. 28, 1992, 106 Stat. 4084; Pub. L.
103-325, title III, Sec. 337, Sept. 23, 1994, 108 Stat. 2235.)
Amendments
1994--Subsec. (g)(3). Pub. L. 103-325 inserted ``that is not well
capitalized (as defined in section 1831o of this title)'' after
``includes any insured depository institution'', substituted ``of such
institution'' for ``of any insured depository institution'', and struck
out ``(with respect to such deposits)'' after ``offering rates of
interest'' and ``having the same type of charter'' after ``other insured
depository institutions''.
1992--Subsec. (a). Pub. L. 102-550, Sec. 1605(a)(1)(A), substituted
``An insured'' for ``A insured''.
Subsec. (c). Pub. L. 102-550, Sec. 1605(a)(1)(B), substituted
``capitalized (but not well capitalized)'' for ``capitalized''.
1991--Subsec. (a). Pub. L. 102-242, Sec. 301(a)(1), substituted
``insured depository institution that is not well capitalized'' for
``troubled institution''.
Subsec. (c). Pub. L. 102-242, Sec. 301(a)(2), substituted ``insured
depository institution which is adequately capitalized'' for ``insured
depositary institution''.
Subsec. (d). Pub. L. 102-242, Sec. 301(a)(3), added pars. (2) and
(3) and closing provisions, struck out ``and'' at end of par. (1), and
struck out former par. (2) which read as follows: ``either--
``(A) is necessary to enable the institution to meet the demands
of its depositors or pay its obligations in the ordinary course of
business; or
``(B) is consistent with the conservator's fiduciary duty to
minimize the losses of the institution.''
Subsecs. (e) to (h). Pub. L. 102-242, Sec. 301(a)(4)-(6), (c), added
subsec. (e), redesignated former subsec. (e) as (f) and struck out
``troubled'' before ``institution as the'', redesignated former subsecs.
(f) and (g) as (g) and (h), respectively, added subsec. (h), and struck
out former subsec. (h), as previously redesignated, which defined
``troubled institution''.
Effective Date of 1992 Amendment
Amendment by Pub. L. 102-550 effective as if included in the Federal
Deposit Insurance Corporation Improvement Act of 1991, Pub. L. 102-242,
as of Dec. 19, 1991, see section 1609(a) of Pub. L. 102-550, set out as
a note under section 191 of this title.
Effective Date
Section 224(b) of Pub. L. 101-73 provided that: ``The amendment made
by subsection (a) [enacting this section] shall apply to deposits
accepted after the end of the 120-day period beginning on the date of
the enactment of this Act [Aug. 9, 1989].''
Regulations
Section 301(d) of Pub. L. 102-242 provided that: ``The Corporation
shall promulgate final regulations to carry out the amendments made
under subsections (a), (b), and (c) [enacting section 1831f-1 of this
title and amending this section] not later than 150 days after the date
of enactment of this Act [Dec. 19, 1991], and those regulations shall
become effective not later than 180 days after that date of enactment,
except that such regulations shall not apply to any specific time
deposit made before that date of enactment until the stated maturity of
the time deposit.''
Section Referred to in Other Sections
This section is referred to in sections 1821, 4313 of this title.
