Bill Summary
The "Keeping Deposits Local Act" aims to amend the Federal Deposit Insurance Act to redefine the treatment of reciprocal deposits at insured depository institutions (banks). Specifically, it proposes to increase the thresholds for how much of these deposits can be considered as not being obtained through a deposit broker.
Under the new provisions, a larger portion of an institution's liabilities will qualify as reciprocal deposits without triggering the designation of being brokered funds, which is subject to stricter regulatory scrutiny. The act establishes tiered percentages based on the size of a bank's total liabilities, offering 50% for liabilities up to $1 billion, 40% for liabilities between $1 billion and $10 billion, and 30% for liabilities exceeding $10 billion but less than $250 billion.
Additionally, the act refines the definition of an "agent institution," ensuring that only those institutions with satisfactory CAMELS ratings (a supervisory rating system used by bank regulators) are eligible for these provisions.
Furthermore, the act mandates a study by the Federal Deposit Insurance Corporation (FDIC) in collaboration with the Federal Reserve to analyze the performance and implications of reciprocal deposits since 2018, including their usage in times of financial stress and their comparison to other deposit arrangements. The FDIC is required to report its findings to Congress within six months of the act's enactment, which will aid in understanding the benefits and risks associated with these financial products.
Possible Impacts
The "Keeping Deposits Local Act" could affect individuals and communities in several ways:
1. **Increased Access to Local Banking Services**: By modifying the treatment of reciprocal deposits, the legislation may encourage local banks and credit unions to accept more deposits from local residents and businesses. This could lead to enhanced banking services in underserved areas, making it easier for people to access loans, savings accounts, and other financial products within their community.
2. **Stability for Local Institutions**: The legislation aims to stabilize smaller banks and credit unions by reducing the regulatory burden associated with deposits obtained through brokers. This could result in greater financial security for local institutions, which in turn may boost consumer confidence. Residents may feel more secure banking with local institutions, knowing they are less likely to face instability or closures.
3. **Potential Impact on Municipalities and Non-Profits**: The requirement for a study on the use of reciprocal deposits by end-user depositors, including municipalities and non-profit organizations, suggests that these entities could benefit from better access to funds. If local governments and non-profits are able to secure more favorable deposit arrangements, they may have increased financial flexibility to fund community projects and services, which could ultimately benefit residents through improved infrastructure, services, and community programs.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3234 Reported in House (RH)]
<DOC>
Union Calendar No. 314
119th CONGRESS
1st Session
H. R. 3234
[Report No. 119-362]
To amend the Federal Deposit Insurance Act to modify the amount of
reciprocal deposits of an insured depository institution that are not
considered to be funds obtained by or through a deposit broker, and for
other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 7, 2025
Mr. Emmer (for himself, Mrs. Beatty, Mr. Meuser, and Ms. Moore of
Wisconsin) introduced the following bill; which was referred to the
Committee on Financial Services
November 4, 2025
Additional sponsors: Mr. Barr, Mr. Flood, Mr. Williams of Texas, Mr.
Ezell, Mr. Sessions, Mr. Golden of Maine, Mr. Bergman, and Mr. Rogers
of Alabama
November 4, 2025
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed
in italic]
[For text of introduced bill, see copy of bill as introduced on May 7,
2025]
_______________________________________________________________________
A BILL
To amend the Federal Deposit Insurance Act to modify the amount of
reciprocal deposits of an insured depository institution that are not
considered to be funds obtained by or through a deposit broker, and for
other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Keeping Deposits Local Act''.
SEC. 2. AMOUNT OF RECIPROCAL DEPOSITS THAT ARE NOT CONSIDERED TO BE
FUNDS OBTAINED BY OR THROUGH A DEPOSIT BROKER.
Section 29(i) of the Federal Deposit Insurance Act (12 U.S.C.
1831f(i)) is amended by striking paragraph (1) and inserting the
following:
``(1) In general.--The sum of the following amounts of
reciprocal deposits of an agent institution shall not be
considered to be funds obtained, directly or indirectly, by or
through a deposit broker:
``(A) An amount equal to 50 percent of the portion
of the total liabilities of the agent institution that
is less than or equal to $1,000,000,000.
``(B) An amount equal to 40 percent of the portion,
if any, of the total liabilities of the agent
institution that is greater than $1,000,000,000, but
less than or equal to $10,000,000,000.
``(C) An amount equal to 30 percent of the portion,
if any, of the total liabilities of the agent
institution that is greater than $10,000,000,000, but
less than or equal to $250,000,000,000.''.
SEC. 3. DEFINITION OF AGENT INSTITUTION.
Section 29(i)(2)(A)(i) of the Federal Deposit Insurance Act (12
U.S.C. 1831f(i)(2)(A)(i)) is amended by striking subclause (I) and
inserting the following:
``(I) when most recently examined
under section 10(d) was assigned a
CAMELS rating of 1, 2, or 3 under the
Uniform Financial Institutions Rating
System (or an equivalent rating under a
comparable rating system); and''.
SEC. 4. RECIPROCAL DEPOSITS STUDY.
(a) In General.--The Federal Deposit Insurance Corporation, in
consultation with the Board of Governors of the Federal Reserve System,
shall carry out a study on reciprocal deposits.
(b) Contents.--The study required under subsection (a) shall
include--
(1) an analysis of how reciprocal deposits have performed
since 2018, which shall include--
(A) the use of quantitative and qualitative data;
(B) a breakdown of the usage of reciprocal deposits
by size of insured depository institution;
(C) the usage of reciprocal deposits during periods
of stress; and
(D) an analysis, to the extent practicable, of end-
user depositors, such as municipalities, businesses,
and non-profit organizations, that drive demand for
reciprocal products;
(2) an analysis, to the extent practicable, of how
reciprocal deposits compare to other deposit arrangements; and
(3) an analysis of the benefits and potential risks of
reciprocal deposits.
(c) Report.--Not later than 6 months after the date of enactment of
this Act, the Federal Deposit Insurance Corporation shall issue a
report to the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and Urban
Affairs of the Senate containing all findings and determinations made
in carrying out the report required under subsection (a).
Union Calendar No. 314
119th CONGRESS
1st Session
H. R. 3234
[Report No. 119-362]
_______________________________________________________________________
A BILL
To amend the Federal Deposit Insurance Act to modify the amount of
reciprocal deposits of an insured depository institution that are not
considered to be funds obtained by or through a deposit broker, and for
other purposes.
_______________________________________________________________________
November 4, 2025
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed