A3 - How does the FDIC view brokered deposits?

Compliance > Deposits > Brokered Deposits
Q:  How does the FDIC view brokered deposits?
A:   Brokered deposits can be a suitable funding source when properly managed as part of an overall, prudent funding strategy.  However, some banks have used brokered deposits to fund unsound or rapid expansion of loan and investment portfolios, which has contributed to weakened financial and liquidity positions over successive economic cycles.  The overuse of brokered deposits and the improper management of brokered deposits by problem institutions have contributed to bank failures and losses to the Deposit Insurance Fund.

This can be found in FDIC’s "Identifying, Accepting and Reporting Brokered Deposits Frequently Asked Questions," which can be found at https://www.fdic.gov/news/news/financial/2016/fil16042b.pdf

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