[Congressional Record Volume 172, Number 85 (Tuesday, May 19, 2026)]
[House]
[Pages H3582-H3584]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
KEEPING DEPOSITS LOCAL ACT
Mr. HILL of Arkansas. Mr. Speaker, I move to suspend the rules and
pass the bill (H.R. 3234) 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, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 3234
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).
SEC. 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.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Arkansas (Mr. Hill) and the gentlewoman from California (Ms. Waters)
each will control 20 minutes.
The Chair recognizes the gentleman from Arkansas.
General Leave
Mr. HILL of Arkansas. Mr. Speaker, I ask unanimous consent that all
Members may have 5 legislative days to revise and extend their remarks
and include extraneous material for this bill.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Arkansas?
There was no objection.
Mr. HILL of Arkansas. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I include in the Record the CBO estimate for this bill.
Legislation Considered Under Suspension of the Rules
The Majority Leader of the House of Representatives
announces bills that will be considered under suspension of
the rules in that chamber. Under suspension, floor debate is
limited, all floor amendments are prohibited, points of order
against the bill are waived, and final passage requires a
two-thirds majority vote.
At the request of the Majority Leader and the House
Committee on the Budget, CBO estimates the effects of those
bills on direct spending and revenues. CBO has limited time
to review the legislation before consideration. Although it
is possible in most cases to determine whether the
legislation would affect direct spending or revenues, time
may be insufficient to estimate the magnitude of those
effects. If CBO has prepared estimates for similar or
identical legislation, a more detailed assessment of
budgetary effects, including effects on spending subject to
appropriation, may be included.
EFFECTS ON DIRECT SPENDING AND REVENUES OF LEGISLATION CONSIDERED UNDER SUSPENSION OF THE RULES IN THE HOUSE OF REPRESENTATIVES
Week of May 18, 2026
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Additional
Effect on Direct Information on Direct Link to Published
Bill Number Title Spending Effect on Revenues Spending and Revenue Estimates
Effects
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H.R. 3234.......................... Keeping Deposits Local Increase by at Least Increase by at Least Would increase direct N/A
Act of 2025, as $500K. $500K. spending by $27
amended. million, increase
revenues by $27
million, and result
in no increase in
the deficit.
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Mr. HILL of Arkansas. Mr. Speaker, I rise in support of H.R. 3234,
the Keeping Deposits Local Act, and I thank my longtime friend and our
majority whip, Tom Emmer of Minnesota, and Congresswoman Joyce Beatty
for their tremendous bipartisan leadership on this particular matter.
I also thank the ranking member of our full committee, the House
Financial Services Committee, for her continued willingness to work
across the aisle on cornerstone reforms that benefit our Nation's
community banks.
Community banks are one of the most important economic drivers behind
Main Street. They deserve a regulatory framework that encourages them
to compete, grow, and better serve their customers.
Reciprocal deposits are a proven tool that helps banks attract,
retain, and diversify their funding sources while simultaneously giving
depositors greater FDIC insurance coverage.
As a former community bank CEO, I personally used this service to
help provide better service for important customers.
Right now, overly burdensome broker deposit regulations are standing
in the way. Community banks, many of which operate with a limited
branch network, are being penalized for using a funding tool that poses
no meaningful risk to financial stability.
Majority Whip Emmer and Congresswoman Beatty's bill addresses this
issue. It allows community banks to accept a greater volume of
reciprocal deposits before triggering the overly stringent broker
deposit rules. This, in turn, frees up more capital to make loans in
the communities they serve.
Additionally, as a bank's size increases, the threshold for
reciprocal deposits that it may accept decreases, ensuring that
oversight scales with risk.
The bill also directs the FDIC to study reciprocal deposits and
report back to Congress, ensuring that we have the data to inform
direction on deposit insurance policy.
[[Page H3583]]
This is the kind of smart, targeted reform that has been at the heart
of my efforts to make community banking great again in our legislative
agenda in this 119th Congress.
I am proud to support this bill by Mr. Emmer, and I urge my
colleagues to do the same. Mr. Speaker, I reserve the balance of my
time.
Ms. WATERS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise in support of H.R. 3234, the Keeping Deposits
Local Act, sponsored by Representative Emmer and our former Diversity
and Inclusion Subcommittee chairwoman, Mrs. Joyce Beatty.
I appreciate the sponsors' bipartisan work on this bill. In 2018, I
worked with them to establish the initial framework for the so-called
reciprocal deposits.
When a business comes to a bank and deposits, say, $1 million to
cover payroll and other expenses, the FDIC only ensures up to $250,000.
To help these customers receive deposit insurance on all of their
deposits, banks can send a deposit over the $250,000 cap to another
bank in exchange for a separate deposit from the receiving bank, which
is known as a reciprocal deposit.
The product has become popular, especially after the dramatic
failures of Silicon Valley Bank and two other regional banks in 2023
because businesses wanted to make sure they don't have any uninsured
deposits. This bill would increase the limits we set back in 2018 based
on a bank's size.
Now, megabanks don't need our help because they are, unfortunately,
still perceived as too big to fail. In fact, a number of small
businesses moved their deposits to megabanks after the 2023 regional
bank failures.
I appreciate that the chairman and the sponsors worked with me to
address my concerns that an earlier version of this bill would have
been a windfall for megabanks. It has been revised to ensure the bill
prioritizes support for smaller community and midsize banks like MDIs
and CDFI banks.
There is more that we should do than just this bill. Since 2007,
there have been at least 37 bank failures where emergency tools were
not used to protect depositors because the bank was too small. As a
result, small business customers with more than $250,000 lost money
through no fault of their own when their bank failed. That is not fair.
After convening a roundtable with industry experts and consulting
extensively with our former chairman, Mr. McHenry, I introduced my
bill, H.R. 4551, the Employee Paycheck and Small Business Protection
Act.
Under my bill, the government would take a data-driven approach,
conduct an extensive analysis, and then propose an increase to the
$250,000 deposit insurance threshold for business payment accounts.
There would be multiple opportunities for stakeholders to weigh in as
the proposal gets developed, with extensive congressional oversight.
Furthermore, my bill would allow regulators to do an emergency
Transaction Account Guarantee, or TAG, program for up to 9 months, just
like the FDIC did in the 2008 crisis, to protect depositors from harm
in a major crisis.
{time} 1710
My bill would help protect all small businesses and their employees
while helping community banks and credit unions better serve their
communities. This concept has broad support, including several House
Republicans recently introducing their own bills, along with a
bipartisan effort in the Senate. Moreover, Vice President Vance and
Treasury Secretary Bessent are strongly supportive of these efforts.
In a letter from when we marked up this bill we are considering
today, the Independent Community Bankers of America wrote: ``ICBA looks
forward to working with the committee on the broader, comprehensive
deposit insurance coverage level debate and ensuring more small
businesses can have important protection for their deposits.''
We should do more, Mr. Speaker, but in the meantime, I urge my
colleagues to support H.R. 3234, which will complement broader deposit
insurance reform efforts.
Mr. Speaker, I reserve the balance of my time.
Mr. HILL of Arkansas. Mr. Speaker, I want to recognize the author of
this important bill from the Republican side that helps our community
banks better serve their customers through a diverse approach to
deposit insurance.
Mr. Speaker, I yield 2 minutes to the gentleman from Minnesota (Mr.
Emmer), who is the majority whip of the Republican-led House.
Mr. EMMER. Mr. Speaker, I thank Chairman Hill for yielding.
Mr. Speaker, reciprocal deposits are secure, fully FDIC-insured
deposits that enable community banks to retain local funds, while at
the same time ensuring those deposits remain protected.
In 2018, Congress enacted nonpartisan legislation recognizing that
most reciprocal deposits should not be treated as brokered deposits. I
was proud to lead that initiative then, and I am proud to build on that
progress with the bill before us today.
Since the enactment of S. 2155 nearly 8 years ago, many banks have
turned to these low-cost, core deposits, as they have approached the
current limits of the lesser of $5 billion or 20 percent of total
liabilities.
In response, my colleague, Representative Beatty, and I introduced
the Keeping Deposits Local Act, a nonpartisan bill that updates
existing thresholds so that community and regional banks can more
easily qualify for nonbrokered treatment of reciprocal deposits.
Simply put, this bill brings our laws in line with today's economic
realities. It gives banks much-needed flexibility and offers local
communities better access to capital, all while making our banking
system more resilient.
I thank Chairman Hill for his tireless work and advocacy on this
issue, and I encourage all of our colleagues to support this bill.
Let's give our local banks the tools they need to grow, compete, and
invest in Main Street.
Ms. WATERS. Mr. Speaker, I yield 3 minutes to the gentlewoman from
Ohio (Mrs. Beatty), who is the co-lead on the bill.
Mrs. BEATTY. Mr. Speaker, I rise in support of my bill, H.R. 3234,
the Keeping Deposits Local Act, which I am very proud to co-lead with
Congressman Emmer.
This bill modernizes the treatment of reciprocal deposits to help
small banks and midsize banks improve liquidity, increase local
community lending, and better compete for larger accounts, all without
jeopardizing the safety and the soundness of our financial system.
Following the bank failures in 2023, we have seen many banks turn to
reciprocal deposits to meet consumer demand, to increase their insured
deposits, and, really, to prevent capital flight.
However, community banks across the country and regional banks like
in my home district, banks like Huntington, Fifth Third, and KeyBank
are quickly running up against the current $5 billion or 20 percent
threshold that was established in 2018.
This means that they are limited in their capacity to attract
deposits from nonprofits, small businesses, and local governments and
municipalities that want to support economic and community development.
To solve this problem, this bill replaces the current cap with a
tiered system to ensure that the greatest benefit goes to the banks
that need it the most: minority depository institutions, MDIs;
community development financial institutions, or CDFIs; and inner-city,
rural, and small banks at the front lines of providing financial
services to underserved communities.
Mr. Speaker, increasing nonbrokered treatment of reciprocal deposits
will greatly support these institutions by allowing them to access
stable funding to help finance affordable housing projects, small
business loans, and community infrastructure.
That is why I am proud to say that this bill has the support of the
Ohio Bankers League and the Ohio regional banks. It is a bipartisan
bill.
Mr. Speaker, I thank our chairman, Congressman Hill, and I thank my
ranking member, Congresswoman Maxine Waters, for supporting and pushing
this bill forward. I urge my colleagues to support the passage of this
bill.
Mr. HILL of Arkansas. Mr. Speaker, I am prepared to close, and I
reserve the balance of my time.
Ms. WATERS. Mr. Speaker, I have no further speakers, and I yield
myself the balance of my time to close.
[[Page H3584]]
Mr. Speaker, this is a good bill that will help community banks. The
bill is supported by the National Bankers Association and the Community
Development Bankers Association, and I am very pleased to support it.
As we have discussed, there is more Congress can do to update the
deposit insurance reform framework to ensure it is working for
community banks, for midsize banks, for MDIs and CDFIs, for rural
banks, and all of their customers, especially the small businesses,
nonprofits, churches, and other organizations and their workers.
Let's pass comprehensive deposit insurance reform into law without
further delay. In the meantime, I, again, urge my colleagues to support
this bill, and I yield back the balance of my time.
Mr. HILL of Arkansas. Mr. Speaker, I thank, again, Whip Emmer and
Mrs. Beatty for their tireless work on this. It has taken a lot of
years of collaboration between both parties on both sides of the aisle
to find a path to move this bill forward, and we couldn't have done it
without the hard work of the gentleman from Minnesota and the
gentlewoman from Ohio. I am grateful for their work.
I recommend everybody on both sides of the aisle support this bill,
and I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Arkansas (Mr. Hill) that the House suspend the rules and
pass the bill, H.R. 3234, as amended.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds
being in the affirmative, the ayes have it.
Mr. HILL of Arkansas. Mr. Speaker, on that I demand the yeas and
nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further
proceedings on this motion will be postponed.
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