119-HR3234

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Summary Provided by Congressional Research Service

This bill increases the amount insured depository institutions may accept as reciprocal deposits. (Reciprocal deposits are used by institutions to increase the availability of deposit insurance by splitting large deposits using a reciprocal network of institutions.) The bill creates a tiered system so that the allowable amount is based on the institution's total liabilities.

Additionally, the bill changes certain qualifications insured depository institutions may be required to have to accept reciprocal deposits. Under current law, institutions may qualify by having a composite rating of outstanding or good, among other requirements. The bill allows institutions with a 1, 2, or 3 rating under the CAMELS scale to qualify. (The Uniform Financial Institutions Rating System uses the characteristics of capital adequacy, asset quality, management, earnings, liquidity, and sensitivity to market risk (i.e., CAMELS ratings) to rate the health of financial institutions, with a 1 indicating the highest rating and least degree of supervisory concern and a 5 indicating the lowest rating and highest degree of supervisory concern.)

Latest available text

1. Short title 2. Amount of reciprocal deposits that are not considered to be funds obtained by or through a deposit broker 3. Definition of Agent Institution 4. Reciprocal deposits study 5. Discretionary Surplus Fund

1. Short title

This Act may be cited as the "Keeping Deposits Local Act".

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.

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

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;

(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).

5. Discretionary Surplus Fund

(a) In general - The dollar amount specified under section 7(a)(3)(A) of the Federal Reserve Act (12 U.S.C. 289(a)(3)(A)) is reduced by $28,000,000.

(b) Effective date - The amendment made by subsection (a) shall take effect on September 1, 2036.

Passed the House of Representatives May 20, 2026.Kevin F. McCumber,Clerk.