The Federal Deposit Insurance Corp. gave details Tuesday on how to comply with interest-rate restrictions on deposits at some banks that take effect Jan 1.
An FDIC rule issued in May — to establish a new national deposit rate limit for less-than-well-capitalized banks — has two objectives: stopping weak banks from exploiting previously unclear limits, and giving some banks with brokered funds relief from a prior cap that relied on ultra-low Treasuries.
The agency reminded banks about the rule in a letter as well as a document answering common questions about the restrictions, including how they are different from earlier rules. The letter informed banks that they may begin complying with the rule before Jan. 1.
Under the rule, a bank that is less than well capitalized may exceed the cap only if it seeks and receives FDIC agreement that the institution is in a "high-rate" area. The rate will be posted regularly on the agency's Web site.