Keeping Deposits Local Act
Keeping Deposits Local Act would change how the Federal Deposit Insurance Act treats reciprocal deposits for purposes of being considered “funds obtained by or through a deposit broker.” The bill creates a tiered exemption: a certain portion of reciprocal deposits would not count as brokered funds, with the exemption calculated as percentages of different liability bands. Eligibility for this exemption would require the agent institution to have a CAMELS rating of 1, 2, or 3 (a measure of safety and soundness). In short, the bill aims to allow insured banks with good supervisory ratings to count more of their reciprocal deposits as non-brokered, potentially encouraging more local funding and reducing some brokered-deposit constraints for qualifying banks.
Key Points
- 1The bill revises Section 29(i) of the Federal Deposit Insurance Act to define how much reciprocal deposits “shall not be considered” funds obtained through a deposit broker, using a tiered percentage schedule based on total liabilities.
- 2New exemption amounts by liability bands:
- 3- 50% of liabilities up to $1 billion
- 4- 40% of the portion between $1 billion and $10 billion
- 5- 30% of the portion between $10 billion and $250 billion
- 6- 20% of the portion between $250 billion and $1 trillion
- 7- 2% of the portion above $1 trillion
- 8The exemption is applied to reciprocal deposits of an agent institution, allowing these deposits to be treated as non-brokered under the right circumstances.
- 9The definition of an “agent institution” is changed to require a CAMELS rating of 1, 2, or 3 (i.e., a higher standard of safety and soundness) rather than the prior phrasing about composite condition.
- 10Legislative status: Introduced in the Senate as S. 2757 on September 10, 2025, by Senator rounds (and co-sponsors) and referred to the Committee on Banking, Housing, and Urban Affairs.