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Stealth FAQ Updates from Treasury and the FDIC

February 28, 2012

Authors

Robert Klingler

Stealth FAQ Updates from Treasury and the FDIC

February 28, 2012

by: Robert Klingler

Over the last several months, we have become aware of a number of changes to various regulator’s frequently asked questions.  These changes are frequently made without any public announcement, and, in some cases, without any notation that the FAQ’s have been modified at all.  Frequently, banks are made only made aware of the change when they (a) aren’t aware of the initial FAQ, and (b) subsequently ask the question and are directed to the FAQ.

On November 1, 2011, the FDIC updated its Frequently Asked Questions regarding the “High-Rate Area” exception to the market rate caps for less than

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Renewing “High Rate Area” Determinations

November 14, 2010

Authors

Robert Klingler

Renewing “High Rate Area” Determinations

November 14, 2010

by: Robert Klingler

As we have previously discussed, FDIC determinations that a bank is operating in a “high rate area” remains effective only for the calendar year in which it was granted.  All banks that received a high-rate determination in 2010 are required to submit a new request to the FDIC in order to continue their ability to use the local market average calculation method for determining their rate cap in 2011.

The FDIC has informed us that these requests will not be processes prior to year-end, but that banks that submit a request will be entitled to continue to use

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High Rate Area Determination Relief?

March 23, 2010

Authors

Robert Klingler

High Rate Area Determination Relief?

March 23, 2010

by: Robert Klingler

On Friday, March 18, 2009, FDIC Chairman Sheila Bair addressed the inclusion of all branches in the calculation of local rates in a speech at the ICBA convention in Orlando.  This modification may (1) create new or renewed opportunities for community banks to apply for, and receive, high rate area determinations, and (2) increase the relevant local rate for institutions operating in high rate areas.

As some of you may know, last year we changed the rule for complying with the statutory interest-rate restrictions for banks that are less than well capitalized. The new regulation includes a

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Process for Requesting Determination of “High-Rate Area”

December 9, 2009

Authors

Robert Klingler

Process for Requesting Determination of “High-Rate Area”

December 9, 2009

by: Robert Klingler

On December 4, 2009, the FDIC published Financial Institution Letter FIL-69-2009, which outlines the process for requesting a “high-rate area” determination by the FDIC to exempt the institution from compliance with the national rate caps.  As we’ve previously discussed, financial institutions that are less than well capitalized will be barred from paying in excess of 75 basis points above the national rate unless the institution is able to persuade the FDIC that the institution’s local market rate is above the national rate.  The new guidance confirms our previous understanding of the process the FDIC will use in

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Updated Guidance on Seeking a “High-Rate Area” Determination

November 17, 2009

Authors

Robert Klingler

Updated Guidance on Seeking a “High-Rate Area” Determination

November 17, 2009

by: Robert Klingler

The FDIC has not yet formally published the anticipated guidance on how an institution can seek a “high-rate area” determination under the national interest rate restrictions for less than well-capitalized banks.  However, based on conversations with FDIC officials, we understand that the FDIC is accepting requests that a bank be determined to be in a “high-rate area.”

We understand that the request should include a self-identification of the bank’s relevant market area.  The FDIC will not set specified market areas, but rather will consider the market rate identified by the institution.  Institutions are also encouraged to identify competing credit

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FDIC Issues New Guidance Relating to the Brokered Deposit/Interest Rate Restrictions

November 4, 2009

Authors

Michael Shumaker

FDIC Issues New Guidance Relating to the Brokered Deposit/Interest Rate Restrictions

November 4, 2009

by: Michael Shumaker

As we have discussed earlier, the FDIC has revised the brokered deposit/interest rate restrictions to create a presumption in favor of a “national deposit rate” starting January 1, 2010. Under this new rule, financial institutions that are less than well capitalized will be barred from paying in excess of 75 basis points above the national rate unless the institution is able to persuade the FDIC that the institution’s local market rate is above the national rate. As noted earlier, we anticipate that the presumption in favor of the national rate will be difficult to overcome.

On November 3,

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Overcoming the National Deposit Interest Rate Presumption

July 2, 2009

Authors

Robert Klingler

Overcoming the National Deposit Interest Rate Presumption

July 2, 2009

by: Robert Klingler

As we’ve previously discussed, the FDIC has revised the brokered deposit/interest rate restrictions to create a presumption in favor of a “national deposit interest rate” starting January 1, 2009.  Less than well-capitalized institutions will be then barred from paying in excess of 75 basis above the national rate, unless the institution is successful in convincing the FDIC that the institution’s local deposit rate market is above the national rate.

We have had several conversations with FDIC staff over the last few weeks regarding the FDIC’s intentions with respect to the new national deposit rate structure and how FDIC in

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FDIC Issues Final Brokered Deposit and Interest Rate Restriction Regulations

June 2, 2009

Authors

Michael Shumaker

FDIC Issues Final Brokered Deposit and Interest Rate Restriction Regulations

June 2, 2009

by: Michael Shumaker

On May 29, 2009, the FDIC adopted a final rule amending the interest rate restrictions applicable to institutions that are less than well capitalized.  The new regulation, which will take effect on January 1, 2010, will effectively tie interest rate caps to an average of interest rates charged nationally, significantly diminishing the importance of calculating prevailing interest rates within local deposit market areas.  Less than well-capitalized institutions will generally be subject to national rate caps as published by the FDIC.

Existing Rules

Section 29 of the Federal Deposit Insurance Act places statutory limits on the ability of any

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Interest Rate and Brokered Deposit Restrictions

January 28, 2009

Authors

Robert Klingler

Interest Rate and Brokered Deposit Restrictions

January 28, 2009

by: Robert Klingler

On January 27, 2009, the FDIC proposed to amend its regulation relating to interest rate restrictions on institutions that are less than well capitalized.  The proposed regulation would tie the interest rate caps to published national interest rates and eliminate the concept of local deposit market areas.

Section 29 of the Federal Deposit Insurance Act places statutory limitations on the ability of any insured depository institution that is not well capitalized to accept funds obtained by or through any deposit broker.  Because of the statutory definition of a deposit broker, these limitations also limit the interest rates which may

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