Q: Does a renewal or rollover of an account qualify as an acceptance of a deposit?
A: Yes. The funds in a certificate of deposit (CD) account are accepted when the account is renewed or rolled over. Of course, an acceptance of a deposit is not restricted under Section 29 of the FDI Act unless the deposit is accepted from or through a deposit broker. Therefore, if no third party is involved with the CD account at the time of renewal or rollover, the insured depository institution will be free to accept the deposit (i.e., renew the account), even if the institution is not well capitalized at the time of the renewal or rollover and even if a third party (i.e., a deposit broker) was involved with the original opening of the account. However, any type of involvement by the third party will be sufficient to qualify the renewed account as a brokered deposit. For example, the payment of a fee to the third party by the insured depository institution, such as a “renewal fee,” would constitute involvement. A common example of involvement would be the actual holding of the account in the name of the third party (as agent or custodian for the owner or owners). Another example of involvement by the third party would be its continued access to account information (such as the balance of the account). As a result of these types of involvement, or any other types of involvement by the third party, the renewed account would be a brokered deposit subject to the restrictions in Section 29.