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FDIC Proposes Modernizing Changes to Brokered Deposits, Community Reinvestment Act Regulations

Friday, December 13, 2019 — 14:00:17 (EST)

On November 12, the FDIC proposed revisions to its brokered deposit regulation. Section 29 of the Federal Deposit Insurance Act prohibits less-than-well-capitalized institutions from accepting assets obtained through deposit brokers. The revisions would clarify the meaning of “deposit broker” and broaden the application of certain exceptions from the definition. These changes are intended to modernize the regulation to reflect technological changes and innovations that have occurred since the passage of Section 29 in 1989.

Together with the OCC, the FDIC also proposed a rule to modernize the regulations implementing the 1977 Community Reinvestment Act (CRA), which is intended to ensure that banks meet the credit needs of the communities they serve, including low- and moderate-income neighborhoods. The proposal would clarify and expand the activities that qualify for credit under CRA and would modify the geographical areas in which banks would be assessed to account for banks that do not rely on traditional branch networks to generate deposits. “Modernizing the 1977 Community Reinvestment Act…is long overdue, and we are encouraged that the agencies have begun the process,” said Greg Baer, President and CEO of BPI, in a statement. “We are pleased that the agencies have proposed a process by which banks could determine whether a loan or investment qualifies before they make it, which would enable banks to work more closely with their communities to identify and pursue creative ways to better address communities’ funding needs. The agencies have indicated that they will continue to refine the rule before finalizing it, and we remain optimistic that the additional improvements will result in a joint rulemaking that the Federal Reserve and all stakeholders can support.”

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Source: Company press release. end of article

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