Brokered Deposits and Strategic Planning

Summary

This practice note provides an overview of brokered deposits and discusses applicable regulatory restrictions, including a regulation finalized by the FDIC on December 15, 2020 (2020 Regulation), FAQs issued by the Federal Deposit Insurance Corporation (FDIC) in 2016 and 2022 regarding, respectively, the identification, acceptance, and reporting of brokered deposits (2016 FDIC Guidance) by insured depository institutions (IDIs) and changes to the previous rule (2022 FDIC Guidance) made by the 2020 Regulation. Brokered deposits are frequently viewed by IDIs as a cost-effective source of liquidity and funding. Federal bank regulatory agencies, however, consider brokered deposits a less stable source of funding, and a contributing factor that exacerbated the 2008 global financial crisis.