WASHINGTON - The Federal Deposit Insurance Corp. warned banks Thursday to avoid brokered deposit arrangements with a California securities firm that is offering easy profits but may be charging hidden fees.

FDIC officials said that the deposit broker, San Clemente Securities Inc., has sold long-term, discounted certificates of deposit with the promise of high interest rates, but secretly deducted "substantial" fees before investing the proceeds. The agency is concerned because banks that have bought the CDs are counting them as capital when their value is much less than the banks thought.

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