[Congressional Record Volume 172, Number 85 (Tuesday, May 19, 2026)]
[House]
[Pages H3586-H3588]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
COMMUNITY BANK DEPOSIT ACCESS ACT OF 2025
Mr. HILL of Arkansas. Mr. Speaker, I move to suspend the rules and
pass the bill (H.R. 5317) to amend the Federal Deposit Insurance Act to
ensure that certain custodial deposits of well capitalized insured
depository institutions are not considered to be funds obtained by or
through deposit brokers, and for other purposes, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 5317
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 ``Community Bank Deposit
Access Act of 2025''.
SEC. 2. LIMITED EXCEPTION FOR CUSTODIAL DEPOSITS.
(a) In General.--Section 29 of the Federal Deposit
Insurance Act (12 U.S.C. 1831f) is amended by adding at the
end the following:
``(j) Limited Exception for Custodial Deposits.--
``(1) In general.--Custodial deposits of an eligible
institution shall not be considered to be funds obtained,
directly or indirectly, by or through a deposit broker to the
extent that the total amount of such custodial deposits does
not exceed an amount equal to 20 percent of the total
liabilities of the eligible institution.
``(2) Definitions.--In this subsection:
``(A) Custodial deposit.--The term `custodial deposit'
means a deposit that is not deposited at an insured
depository institution in return for fees paid by the insured
depository institution pursuant to an agreement with a third
party and that would otherwise be considered to be obtained,
directly or indirectly, by or through a deposit broker, if
the deposit is deposited at 1 or more insured depository
institutions, for the purpose of providing or maintaining
deposit insurance for the benefit of a third party, by or
through any of the following, each acting in a formal
custodial or fiduciary capacity for the benefit of a third
party:
``(i) An insured depository institution serving as agent,
trustee, or custodian.
``(ii) A trust entity controlled by an insured depository
institution serving as agent, trustee, or custodian.
``(iii) A State-chartered trust company serving as agent,
trustee, or custodian.
``(iv) A plan administrator or investment advisor, acting
in a formal custodial or fiduciary capacity for the benefit
of a plan.
``(B) Eligible institution.--The term `eligible
institution' means an insured depository institution that
accepts custodial deposits, if the insured depository
institution has less than $10,000,000,000 in total assets as
reported on the consolidated report of condition and income
as reported quarterly to the appropriate Federal banking
agency and--
``(i)(I) when most recently examined under section 10(d)
was assigned a composite rating of 1, 2, or 3 under the
Uniform Financial Institutions Rating System (or an
equivalent rating under a comparable rating system); and
``(II) is well capitalized; or
``(ii) has obtained a waiver pursuant to subsection (c).
``(C) Plan.--The term `plan' has the meaning given the term
in section 3 of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1002).
``(D) Plan administrator.--The term `plan administrator'
has the meaning given the term `administrator' in section 3
of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1002).
``(E) Well capitalized.--The term `well capitalized' has
the meaning given the term in section 38(b).''.
(b) Interest Rate Restriction.--Section 29 of the Federal
Deposit Insurance Act (12 U.S.C. 1831f), as amended by
subsection (a), is further amended by adding at the end the
following:
``(k) Restriction on Interest Rate Paid on Certain
Custodial Deposits.--
``(1) Definitions.--In this subsection--
``(A) the terms `custodial deposit', `eligible
institution', and `well capitalized' have the meanings given
those terms in subsection (j); and
``(B) the term `covered insured depository institution'
means an insured depository institution that while acting as
an eligible institution under subsection (j), accepts
custodial deposits while not well capitalized.
``(2) Prohibition.--A covered insured depository
institution may not pay a rate of interest on custodial
deposits that are accepted while not well capitalized that,
at the time the funds or custodial deposits are accepted,
significantly exceeds the limit set forth in paragraph (3).
``(3) Limit on interest rates.--The limit on the rate of
interest referred to in paragraph (2) shall be not greater
than--
``(A) the rate paid on deposits of similar maturity in the
normal market area of the covered insured depository
institution for deposits accepted in the normal market area
of the covered insured depository institution; or
``(B) the national rate paid on deposits of comparable
maturity, as established by the Corporation, for deposits
accepted outside the normal market area of the covered
insured depository institution.''.
SEC. 3. 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 $4,000,000.
(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.
[[Page H3587]]
{time} 1730
General Leave
Mr. HILL of Arkansas. Mr. Speaker, I ask unanimous consent that all
Members may have 5 legislative days in which to revise and extend their
remarks and include extraneous material on 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 include in the Record the
Congressional Budget Office estimate for the bill.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Arkansas?
There was no objection.
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 CONSIDERATION 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. 5317.......................... Community Bank Deposit Increase by at Least Increase by at Least Would increase direct N/A
Access Act of 2025, $500K. $500K. spending by $3
as amended. million, increase
revenues by $3
million, and result
in no increase in
the deficit,.
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Mr. HILL of Arkansas. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I will speak in support of H.R. 5317, the Community Bank
Deposit Access Act.
This is a bill that over my time in Congress I have introduced
several times and worked with colleagues to extend the ability to
attract deposits to local community banks to make them more
competitive.
This bill works to essentially give community banks greater
flexibility to access stable and reliable funding sources so that they
can continue to meet the financial needs of the communities they serve.
Community banks, as we have talked about today, play a vital role in
our local economies by supporting small businesses, farmers, and
consumers who depend on them for access to credit and other essential
financial services.
That is why it is important that our community institutions have
access to a diverse and dependable set of funding sources so that they
can continue to meet these demands.
One source of funding comes through custodial deposits, which are the
funds placed at a bank by a third party on behalf of underlying
customers or beneficiaries who own the funds but may not have a direct
banking relationship with that institution.
Mr. Speaker, a few minutes ago, we talked about reciprocal deposits.
Let's say I am a small business, and I have $500,000 as a typical
average collected balance in my business, but I only have deposit
insurance of $250,000. The reciprocal deposit bill that Mrs. Beatty
offered a few minutes ago with Tom Emmer of Minnesota allows that
other $250,000 for that small business to be covered for deposit
insurance. That is very important and very useful to have that
customer-bank service relationship.
Custodial deposits are similar, but what if it is a much larger
amount of money, a much bigger business? Custodial deposits allow banks
to serve their customer that way with one statement by seeing the money
spread across more banks.
This is a cash management product that allows a local community bank
to play a lead role in Treasury management for a larger commercial
customer.
Let's say, for example, a landlord might place tenant security
deposits in a custodial account at a local bank, even though the
tenants remain the ultimate owner of those funds and, hence, the
ability to be benefited by that.
These arrangements provide benefits to all of the parties involved.
Banks gain access to stable, low-cost deposits, while customers and
third parties benefit from the convenience of a more centralized
account management function, along with the protections provided by
deposit insurance.
The FDIC has long recognized this deposit insurance process and how
it can apply on a pass-through basis, meaning that underlying funds
remain insured so long as each beneficiary's share stays within the
applicable deposit insurance limit.
My bill would expand access to these arrangements for banks under $10
billion in assets that maintain strong capital levels and sound
supervisory ratings or otherwise receive a waiver from their primary
bank regulator.
Custodial deposits are a stable relationship-based funding source
that allows a community bank to support small businesses, families, and
local economies.
These deposits can provide smaller institutions with access to
depositors and funding relationships that might otherwise be out of
reach and help diversify their funding base and improve their financial
stability.
Yet, under current law, many of these deposits are treated the same
as if they were brokered deposits and subject to rules that were never
intended for these type of relationship accounts.
This outdated treatment creates unnecessary burdens for community
banks and limits their ability to responsibly utilize custodial
deposits to support lending in their communities.
By clarifying that custodial deposits are not brokered deposits, if
they do not exceed 20 percent of the total liabilities of the community
bank, my bill gives lenders the certainty they need to accept these
funds and put that money to work in their communities.
This is a commonsense, bipartisan solution that strengthens community
banks, supports local lending, and preserves the safety and soundness
of the financial system without increasing the risk to our Deposit
Insurance Fund.
Mr. Speaker, I urge all of my colleagues to support this bill, and 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. 5317, the Community Bank
Deposit Access Act of 2025, sponsored by Chairman Hill.
Let me start by thanking the chairman for his focus on supporting
community banks and credit unions, including community development
financial institutions, or CDFIs, and minority depository institutions,
or MDIs.
This bill will allow community banks to receive so-called custodial
deposits from larger banks and then use those funds to lend into their
communities.
Custodial deposits are shared between banks in a network, allowing
them to provide FDIC insurance on amounts larger than $250,000,
although for a fee paid by the MDI or community bank.
Mr. Speaker, the original introduced bill would have provided an
unnecessary exemption for the largest banks which, as we have
discussed, honestly don't need help competing for deposits. I
appreciate that Mr. Hill and his staff worked with us on important
improvements to narrow the focus of this bill to just support community
banks.
[[Page H3588]]
Furthermore, as I have said before, I do not believe this reform will
singlehandedly get community banks all the help they need to compete
for deposits and acquire more small business customers.
Mr. Speaker, I would again urge the chairman and the supporters of
this bill to work with me and support advancing deposit insurance
reform, like my bill, which takes a data-driven approach that the
chairman said he would prefer, with opportunities for stakeholder input
and congressional oversight.
I also commend Representatives Lucas, Barr, Meuser, and Stutzman for
recently introducing their own deposit insurance reform bills. I
couldn't help but notice their bills have a lot of similarities with my
bill and with similar bipartisan reform efforts in the Senate.
It has been more than 15 years since Congress updated our deposit
insurance framework, and it is time for Congress to comprehensively
update it again.
H.R. 5317 is a good piece of that reform effort, and I urge my
colleagues to support the chairman's bill, and I reserve the balance of
my time.
Mr. HILL of Arkansas. Mr. Speaker, I am prepared to close and reserve
the balance of my time.
Ms. WATERS. Mr. Speaker, I yield myself the balance of my time.
Mr. Speaker, I again thank the chairman for working with me regarding
improvements that were made to the bill in markup to ensure it focused
on helping community banks.
Custodial deposits are something that community banks can use as a
funding source to help them better serve their communities.
I hope today's vote on this bill and the bill of the gentleman from
Minnesota (Mr. Emmer) and the gentlewoman from Ohio (Mrs. Beatty) is
just the beginning in our efforts to modernize our deposit insurance
framework broadly and to provide even more tools for community banks to
compete for deposits from local churches, nonprofits, city governments,
and small businesses.
Mr. Speaker, I urge the chairman to work with me and our members to
advance broad deposit insurance reform.
In the meantime, I urge the House to advance the chairman's bill,
which serves as a good, complementary reform to help our smallest banks
compete.
Mr. Speaker, I yield back the balance of my time.
Mr. HILL of Arkansas. Mr. Speaker, I yield myself the balance of my
time.
Mr. Speaker, let me say I appreciate the gentlewoman's engagement on
deposit insurance policy at large. I think it is an important topic.
She and I both share the importance of reviewing our deposit insurance
system, make sure it is competitive, make sure it encourages safe and
sound banking, make sure it doesn't expand in any way the moral hazard
associated with too much reliance on a government safety net in any way
that might encourage too great risk-taking.
She is right. We should do that in a data-dependent way and do that
collectively, and we have had assistance in that regard from the FDIC
and others.
I am grateful for her cooperation on moving the reciprocal deposit
bill earlier today, Mrs. Beatty and Mr. Emmer's bill, this custodial
deposit effort. Both of these bills help our community banks be more
competitive across the country as they try to grow their business in
the face of a lot of competition.
Mr. Speaker, I thank the gentlewoman for her support. I urge a
``yes'' vote on both sides of the aisle, and I yield back the balance
of my time.
{time} 1740
The SPEAKER pro tempore (Mr. Kennedy of Utah). 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. 5317, 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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