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4000 - Advisory Opinions


Does Acceptance of Brokered Deposits in Violation of Section 29 of the FDI Act Affect the Insurance of the Deposits So Received

FDIC-89-55

December 8, 1989

Alan J. Kaplan, Senior Counsel

General Counsel John Douglas has asked me to respond to your December 5 letter, in which you ask whether the acceptance of brokered deposits by an insured depository institution in violation of section 29 of the Federal Deposit Insurance Act ("FDI Act") (as added by section 224 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989) would in any way affect whether those deposits are covered by FDIC insurance.

Any obligation of an insured depository institution that meets the definition of the term "deposit" contained in section 3(l) of the FDI Act (12 U.S.C. 1813(l)) would be insured by the FDIC within the limits prescribed by the FDI Act. The extent of such insurance coverage would, of course, depend upon the amount of the particular deposit and whether the owner of the deposit maintained any other deposits in the same right and capacity in the same depository institution. If an obligation otherwise meets the statutory definition of "deposit," the fact that its acceptance may have been contrary to section 29 of the FDI Act would not affect its insurability.

Accordingly, this will confirm that the acceptance of brokered deposits by an insured depository institution in violation of section 29 of the FDI Act will not affect the deposit insurance coverage of those deposits.


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