KEEPING DEPOSITS LOCAL ACT

On 2026-05-19, Representative Joyce Beatty (D-OH-3) delivered a floor speech titled "KEEPING DEPOSITS LOCAL ACT" in the House.

KEEPING DEPOSITS LOCAL ACT

Congressional Record, Volume 172 Issue 85 (Tuesday, May 19, 2026) [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 -------------------------------------------------------------------------------------------------------------------------------------------------------- Additional Effect on Direct Information on Direct Link to Published Bill Number Title Spending Effect on Revenues Spending and Revenue Estimates Effects -------------------------------------------------------------------------------------------------------------------------------------------------------- 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. -------------------------------------------------------------------------------------------------------------------------------------------------------- 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 businesse

Referenced legislation: S2155, HR3234, HR4551