[House Report 119-362]
[From the U.S. Government Publishing Office]
119th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 119-362
======================================================================
KEEPING DEPOSITS LOCAL ACT
_______
November 4, 2025.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Hill of Arkansas, from the Committee on Financial Services,
submitted the following
R E P O R T
[To accompany H.R. 3234]
The Committee on Financial Services, to whom was referred
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, having considered the same, reports favorably thereon
with an amendment and recommends that the bill as amended do
pass.
CONTENTS
Page
Purpose and Summary.............................................. 2
Background and Need for Legislation.............................. 2
Committee Consideration.......................................... 3
Related Hearings................................................. 3
Committee Votes.................................................. 4
Committee Oversight Findings..................................... 6
Performance Goals and Objectives................................. 6
Committee Cost Estimate.......................................... 6
New Budget Authority and CBO Cost Estimate....................... 6
Unfunded Mandates Statement...................................... 6
Earmark Statement................................................ 6
Federal Advisory Committee Act Statement......................... 7
Applicability to the Legislative Branch.......................... 7
Duplication of Federal Programs.................................. 7
Section-by-Section Analysis of the Legislation................... 7
Changes in Existing Law Made by the Bill, as Reported............ 8
Documents included by Unanimous Consent.......................... 13
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
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).
Purpose and Summary
H.R. 3234, the Keeping Deposits Local Act, was introduced
on May 7, 2025, by Republican Representative Tom Emmer (MN-06).
H.R. 3234 modifies the amount of reciprocal deposits of an
insured depository institution that are not considered to be
brokered deposits under a graduated scale based on an
institution's total liabilities and asset size. It also allows
institutions that receive a CAMELS composite rating of 1, 2, or
3 that are well capitalized to use this framework.
Background and Need for Legislation
Brokered deposits are a class of deposits created when an
entity (called a ``deposit broker'') facilitates the placement
of one bank's deposits into one or more other banks. Because
they generally represent a less-stable source of funding and
liquidity, prone to withdrawal in pursuit of higher interest
rates paid elsewhere and prone to flight in instances of a
bank's instability, brokered deposits may only be accepted
without restriction by banks that meet the regulatory
definition of ``well capitalized'' or by banks that meet the
regulatory definition of ``adequately capitalized'' with FDIC
approval, but not by banks that are considered
``undercapitalized.''
H.R. 3234 modifies the amount of reciprocal deposits that
are considered to be non-brokered by applying a tiered system
based on total liabilities:
50 percent of the portion of total
liabilities that is less than or equal to $1 billion;
40 percent of the portion (if any) of total
liabilities that is greater than $1 billion, but less
than or equal to $10 billion; and
30 percent of the portion (if any) of total
liabilities that is greater than or equal to $10
billion, but less than $250 billion.
This system would be available for institutions that: have
received a composite CAMELS rating of 1, 2, or 3 in their most
recent examination and that are well capitalized; have obtained
a waiver from the FDIC; or that receive an amount of reciprocal
deposits less than the average amount held in the prior four
calendar quarters following a bank examination finding the
institution to be in a less-than-fair composite condition or
not well capitalized.
Committee Consideration
119TH CONGRESS
On May 7, 2025, Representative Emmer introduced H.R. 3234,
the Keeping Deposits Local Act, with Representatives Joyce
Beatty (D-OH), Dan Meuser (R-PA), and Gwen Moore (D-WI) as
original cosponsors. Representatives Andy Barr (R-KY), Mike
Flood (R-NE), Roger Williams (R-TX), Mike Ezell (R-MS), Pete
Sessions (R-TX), Jared Golden (D-ME), and Jack Bergman (R-MI)
were added subsequently as cosponsors. The bill was referred
solely to the Committee on Financial Services. In addition,
Senator Mike Rounds (R-SD) introduced S. 2757, a companion bill
to H.R. 3234, on September 10, 2025, with Senator Mark Warner
(D-VA) as an original cosponsor. This bill was referred to the
Committee on Banking, Housing, and Urban Affairs.
H.R. 3234 was attached to the September 9, 2025, hearing
titled ``Promoting the Health of the Banking Sector: Reforming
Resolution and Broadening Funding Access for Long-Term
Resilience.''
On September 16, 2025, the Committee on Financial Services
met in open session to consider, among others, H.R. 3234. The
Committee ordered H.R. 3234, as amended, to be favorably
reported to the House of Representatives.
Related Hearings
Pursuant to clause 3(c)(6) of rule XIII of the Rules of the
House of Representatives, the following hearing was used to
develop H.R. 3234:
The Subcommittee on Financial Institutions held a September
9, 2025, hearing titled ``Promoting the Health of the Banking
Sector: Reforming Resolution and Broadening Funding Access for
Long-Term Resilience.'' H.R. 3234 was noticed for legislative
consideration in the hearing. The subcommittee heard testimony
from the following witnesses: Mr. Dory Wiley, President and
CEO, Commerce Street Holdings; Mr. James B. Barresi, Partner,
Squire Patton Boggs; Mr. Hugh Carney, Executive Vice President
of Financial Institution Policy and Regulatory Affairs,
American Bankers Association; Dr. Norbert Michel, Vice
President and Director, Cato Institute Center for Monetary and
Financial Alternatives; and Mr. Robert James, President and
CEO, Carver Financial Corporation, on behalf of the National
Bankers Association.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee Report to include record
votes on the motion to report legislation and amendments
thereto.
On September 16, 2025, the Committee ordered H.R. 3234, as
amended, to be reported favorably to the House by a recorded
vote of 51 yeas and 0 nays, a quorum being present. (Record
Vote No. FC-199).
The Committee considered the following amendments to H.R.
3234:
Representative Emmer offered an amendment in
the nature of a substitute, which made minor edits and
technical changes. This amendment was adopted by a
voice vote.
Representative Emmer offered an amendment
(No. 2), designated EMMER_013. This amendment strikes a
portion of the bill that included additional total
liability tiers for reciprocal deposits that are not
considered to be brokered deposits for total
liabilities between $250 billion and $1 trillion and
for total liabilities above $1 trillion. Additionally,
this amendment requires the FDIC, in consultation with
the Federal Reserve Board, to conduct a study on
reciprocal deposits. This amendment was adopted by a
voice vote.
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Committee Oversight Findings
Pursuant to clause 3(c) of rule XIII of the Rules of the
House of Representatives, the findings and recommendations of
the Committee, based on oversight activities under clause
2(b)(1) of rule X of the Rules of the House of Representatives
are incorporated in the descriptive portions of this report.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the goal of H.R. 3234 is to modernize
regulatory thresholds for the amount of reciprocal deposits
that are not considered to be brokered deposits so that well-
managed and well-capitalized banks can take advantage of
accessing diverse sources of funding that are FDIC-insured.
Committee Cost Estimate
Clause 3(d)(1) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison of the
costs that would be incurred in carrying out H.R. 3234. The
Committee has requested but not received a cost estimate from
the Director of the Congressional Budget Office. However,
pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee will adopt as its own
the cost estimate by the Director of the Congressional Budget
Office once it has been prepared.
New Budget Authority and CBO Cost Estimate
With respect to the requirements of clause 3(c)(2) of rule
XIII of the Rules of the House of Representatives and section
308(a) of the Congressional Budget Act of 1974 and with respect
to requirements of clause 3(c)(3) of rule XIII of the Rules of
the House of Representatives and section 402 of the
Congressional Budget Act of 1974, the Committee will adopt as
its own the cost estimate for the bill prepared by the Director
of the Congressional Budget Office. However, a cost estimate
was not made available to the Committee in time for the filing
of this report. The Chairman of the Committee shall cause such
estimate to be printed in the Congressional Record upon its
receipt by the Committee.
Unfunded Mandates Statement
The Committee has requested but not received from the
Director of the Congressional Budget Office an estimate of the
Federal mandates pursuant to section 423 of the Unfunded
Mandates Reform Act. The Chairman of the Committee shall cause
such estimate to be printed in the Congressional Record upon
its receipt by the Committee.
Earmark Statement
In compliance with clause 9 of rule XXI of the Rules of the
House of Representatives, this bill, as reported, contains no
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(e), 9(f), or 9(g) of rule XXI.
Federal Advisory Committee Act Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Applicability to the Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Duplication of Federal Programs
Pursuant to clause 3(c)(5) of rule XIII of the Rules of the
House of Representatives, the Committee states that no
provision of the bill establishes or reauthorizes a program of
the Federal Government known to be duplicative of another
Federal program, including any program that was included in a
report to Congress pursuant to section 21 of the Public Law
111-139 or the most recent Catalog of Federal Domestic
Assistance.
Section-by-Section Analysis of the Legislation
Section 1. Short title
Section 1 provides the short title is the ``Keeping
Deposits Local Act''.
Section 2. Amount of reciprocal deposits that are not considered to be
funds obtained by or through a deposit broker
Section 2 establishes the sum of the amounts of reciprocal
deposits of an agent institution to not be considered funds
obtained through a deposit broker as:
50 percent of the portion of total
liabilities that is less than or equal to $1 billion;
40 percent of the portion (if any) of total
liabilities that is greater than $1 billion, but less
than or equal to $10 billion;
30 percent of the portion (if any) of total
liabilities that is greater than or equal to $10
billion, but less than $250 billion.
Section 3. Definition of agent institution
Section 3 defines ``agent institution'' as an insured
depository institution that, when most recently examined, 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.
Section 4. Reciprocal deposits study
Section 4 requires the FDIC, in consultation with the
Federal Reserve Board, to conduct a study on reciprocal
deposits. This study shall include an analysis on the
performance of reciprocal deposits since 2018 using
quantitative and qualitative data, a breakdown of the usage of
reciprocal deposits by size of institution, the usage of
reciprocal deposits during periods of stress, and an analysis
of end-user depositors that drive demand for reciprocal
deposits. The study also shall include an analysis of how
reciprocal deposits compare to other deposit arrangements and
the benefits and potential risks of reciprocal deposits. The
FDIC is required to submit a report including the findings of
the study, no later than six months after the date of enactment
of this Act, to the House Committee on Financial Services and
the Senate Committee on Banking, Housing, and Urban
Development.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, and existing law in which no
change is proposed is shown in roman):
FEDERAL DEPOSIT INSURANCE ACT
* * * * * * *
SEC. 29. BROKERED DEPOSITS.
(a) In General.--An insured depository institution that is
not well capitalized may not accept funds obtained, directly or
indirectly, by or through any deposit broker for deposit into 1
or more deposit accounts.
(b) Renewals and rollovers treated as acceptance of funds.--
Any renewal of an account in any troubled institution and any
rollover of any amount on deposit in any such account shall be
treated as an acceptance of funds by such troubled institution
for purposes of subsection (a).
(c) Waiver Authority.--The Corporation may, on a case-by-case
basis and upon application by an insured depository institution
which is adequately capitalized (but not well capitalized),
waive the applicability of subsection (a) upon a finding that
the acceptance of such deposits does not constitute an unsafe
or unsound practice with respect to such institution.
(d) Limited Exception for Certain Conservatorships.--In the
case of any insured depository institution for which the
Corporation has been appointed as conservator, subsection (a)
shall not apply to the acceptance of deposits (described in
such subsection) by such institution if the Corporation
determines that the acceptance of such deposits--
(1) is not an unsafe or unsound practice;
(2) is necessary to enable the institution to meet
the demands of its depositors or pay its obligations in
the ordinary course of business; and
(3) is consistent with the conservator's fiduciary
duty to minimize the institution's losses.
Effective 90 days after the date on which the institution was
placed in conservatorship, the institution may not accept such
deposits.
(e) Restriction on Interest Rate Paid.--
(1) Definitions.--In this subsection--
(A) the terms ``agent institution'',
``reciprocal deposits'', and ``well
capitalized'' have the meanings given those
terms in subsection (i); and
(B) the term ``covered insured depository
institution'' means an insured depository
institution that--
(i) under subsection (c) or (d),
accepts funds obtained, directly or
indirectly, by or through a deposit
broker; or
(ii) while acting as an agent
institution under subsection (i),
accepts reciprocal deposits while not
well capitalized.
(2) Prohibition.--A covered insured depository
institution may not pay a rate of interest on funds or
reciprocal deposits described in paragraph (1) that, at
the time that the funds or reciprocal 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--
(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.
(f) Additional Restrictions.--The Corporation may impose, by
regulation or order, such additional restrictions on the
acceptance of brokered deposits by any institution as the
Corporation may determine to be appropriate.
(g) Definitions Relating to Deposit Broker.--
(1) Deposit broker.--The term ``deposit broker''
means--
(A) any person engaged in the business of
placing deposits, or facilitating the placement
of deposits, of third parties with insured
depository institutions or the business of
placing deposits with insured depository
institutions for the purpose of selling
interests in those deposits to third parties;
and
(B) an agent or trustee who establishes a
deposit account to facilitate a business
arrangement with an insured depository
institution to use the proceeds of the account
to fund a prearranged loan.
(2) Exclusions.--The term ``deposit broker'' does not
include--
(A) an insured depository institution, with
respect to funds placed with that depository
institution;
(B) an employee of an insured depository
institution, with respect to funds placed with
the employing depository institution;
(C) a trust department of an insured
depository institution, if the trust in
question has not been established for the
primary purpose of placing funds with insured
depository institutions;
(D) the trustee of a pension or other
employee benefit plan, with respect to funds of
the plan;
(E) a person acting as a plan administrator
or an investment adviser in connection with a
pension plan or other employee benefit plan
provided that that person is performing
managerial functions with respect to the plan;
(F) the trustee of a testamentary account;
(G) the trustee of an irrevocable trust
(other than one described in paragraph (1)(B)),
as long as the trust in question has not been
established for the primary purpose of placing
funds with insured depository institutions;
(H) a trustee or custodian of a pension or
profitsharing plan qualified under section
401(d) or 403(a) of the Internal Revenue Code
of 1986; or
(I) an agent or nominee whose primary purpose
is not the placement of funds with depository
institutions.
(3) Inclusion of depository institutions engaging in
certain activities.--Notwithstanding paragraph (2), the
term ``deposit broker'' includes any insured depository
institution that is not well capitalized (as defined in
section 38), and any employee of such institution,
which engages, directly or indirectly, in the
solicitation of deposits by offering rates of interest
which are significantly higher than the prevailing
rates of interest on deposits offered by other insured
depository institutions in such depository
institution's normal market area.
(4) Employee.--For purposes of this subsection, the
term ``employee'' means any employee--
(A) who is employed exclusively by the
insured depository institution;
(B) whose compensation is primarily in the
form of a salary;
(C) who does not share such employee's
compensation with a deposit broker; and
(D) whose office space or place of business
is used exclusively for the benefit of the
insured depository institution which employs
such individual.
(h) Deposit Solicitation Restricted.--An insured depository
institution that is undercapitalized, as defined in section 38,
shall not solicit deposits by offering rates of interest that
are significantly higher than the prevailing rates of interest
on insured deposits--
(1) in such institution's normal market areas; or
(2) in the market area in which such deposits would
otherwise be accepted.
(i) Limited Exception for Reciprocal Deposits.--
[(1) In general.--Reciprocal deposits of an agent
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 reciprocal deposits does not exceed the lesser
of--
[(A) $5,000,000,000; or
[(B) an amount equal to 20 percent of the
total liabilities of the agent institution.]
(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.
(2) Definitions.--In this subsection:
(A) Agent institution.--The term ``agent
institution'' means an insured depository
institution that places a covered deposit
through a deposit placement network at other
insured depository institutions in amounts that
are less than or equal to the standard maximum
deposit insurance amount, specifying the
interest rate to be paid for such amounts, if
the insured depository institution--
(i)[(I) when most recently examined
under section 10(d) was found to have a
composite condition of outstanding or
good; and]
(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
(II) is well capitalized;
(ii) has obtained a waiver pursuant
to subsection (c); or
(iii) does not receive an amount of
reciprocal deposits that causes the
total amount of reciprocal deposits
held by the agent institution to be
greater than the average of the total
amount of reciprocal deposits held by
the agent institution on the last day
of each of the 4 calendar quarters
preceding the calendar quarter in which
the agent institution was found not to
have a composite condition of
outstanding or good or was determined
to be not well capitalized.
(B) Covered deposit.--The term ``covered
deposit'' means a deposit that--
(i) is submitted for placement
through a deposit placement network by
an agent institution; and
(ii) does not consist of funds that
were obtained for the agent
institution, directly or indirectly, by
or through a deposit broker before
submission for placement through a
deposit placement network.
(C) Deposit placement network.--The term
``deposit placement network'' means a network
in which an insured depository institution
participates, together with other insured
depository institutions, for the processing and
receipt of reciprocal deposits.
(D) Network member bank.--The term ``network
member bank'' means an insured depository
institution that is a member of a deposit
placement network.
(E) Reciprocal deposits.--The term
``reciprocal deposits'' means deposits received
by an agent institution through a deposit
placement network with the same maturity (if
any) and in the same aggregate amount as
covered deposits placed by the agent
institution in other network member banks.
(F) Well capitalized.--The term ``well
capitalized'' has the meaning given the term in
section 38(b)(1).
* * * * * * *
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