Keeping Deposits Local Act
- Bill Number
- H.R. 3234
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Finance and Financial Sector
- Status
- Passed House
- Latest Action
- 2026-05-21: Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
- Last Updated
- 2026-05-23T06:53:30Z
AI-Generated Summary
Purpose The legislation, titled the "Keeping Deposits Local Act," aims to update rules under the Federal Deposit Insurance Act regarding reciprocal deposits. These are deposits that banks exchange with each other to manage liquidity while keeping funds within the local banking system. The changes seek to adjust limits on when such deposits are treated as brokered deposits, which carry additional regulatory requirements.
Key Provisions
- Tiered Limits on Reciprocal Deposits: The bill replaces the prior flat limit with new percentage-based caps on reciprocal deposits that do not count as brokered funds, scaled by an institution's total liabilities:
- 50% of liabilities up to $1 billion.
- 40% of liabilities between $1 billion and $10 billion.
- 30% of liabilities between $10 billion and $250 billion.
- Updated Agent Institution Definition: An institution qualifies as an "agent institution" (eligible for these rules) only if its most recent examination gave it a CAMELS rating of 1, 2, or 3.
- Required Study: The Federal Deposit Insurance Corporation (FDIC), working with the Federal Reserve, must analyze reciprocal deposit performance since 2018, including usage by bank size, behavior during economic stress, comparisons to other deposit types, and benefits or risks. A report is due within six months of enactment.
- Funding Offset: The Federal Reserve's discretionary surplus fund is reduced by $28 million, effective September 1, 2036.
Significant Changes to Existing Law This act amends Section 29(i) of the Federal Deposit Insurance Act by introducing size-based percentage caps instead of previous limits and tightening the CAMELS rating requirement for eligibility. It adds a new study mandate and a specific reduction to the Federal Reserve's surplus fund.
Potential Impacts
- Government Agencies: The FDIC will conduct and report on the study, while the Federal Reserve faces a delayed reduction in its surplus fund.
- Citizens and Businesses: Larger reciprocal deposit allowances may help community banks retain local funds from entities like municipalities and nonprofits, potentially improving deposit stability without brokered deposit rules.
- International Relations: No direct effects identified.
Main Stakeholders Affected
- Insured depository institutions (banks of varying sizes).
- The FDIC and Federal Reserve Board.
- End-user depositors, including municipalities, businesses, and nonprofit organizations.
- Congressional committees on banking and financial services.
Notable Legal, Constitutional, or Political Implications The bill makes targeted amendments to federal banking statutes without raising apparent constitutional concerns. It uses a future reduction in Federal Reserve funds as an offset, linking regulatory changes to fiscal adjustments. No broader political or international implications are specified in the text.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (11)
Rep. Beatty, Joyce [D-OH-3], Rep. Meuser, Daniel [R-PA-9], Rep. Moore, Gwen [D-WI-4], Rep. Barr, Andy [R-KY-6], Rep. Flood, Mike [R-NE-1], Rep. Williams, Roger [R-TX-25], Rep. Ezell, Mike [R-MS-4], Rep. Sessions, Pete [R-TX-17], Rep. Golden, Jared F. [D-ME-2], Rep. Bergman, Jack [R-MI-1], Rep. Rogers, Mike D. [R-AL-3]
Recent Actions
- 2026-05-21: Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
- 2026-05-20: Motion to reconsider laid on the table Agreed to without objection.
- 2026-05-20: On motion to suspend the rules and pass the bill, as amended Agreed to by the Yeas and Nays: (2/3 required): 405 - 0 (Roll no. 177). (Roll call 177)
- 2026-05-20: Passed/agreed to in House: On motion to suspend the rules and pass the bill, as amended Agreed to by the Yeas and Nays: (2/3 required): 405 - 0 (Roll no. 177). (Roll call 177)
- 2026-05-20: Considered as unfinished business. (consideration: CR H3644-3645)
- 2026-05-19: At the conclusion of debate, the Yeas and Nays were demanded and ordered. Pursuant to the provisions of clause 8, rule XX, the Chair announced that further proceedings on the motion would be postponed.
- 2026-05-19: DEBATE - The House proceeded with forty minutes of debate on H.R. 3234.
- 2026-05-19: Considered under suspension of the rules. (consideration: CR H3582-3584; text: CR H3582)
- 2026-05-19: Mr. Hill (AR) moved to suspend the rules and pass the bill, as amended.
- 2025-11-04: Placed on the Union Calendar, Calendar No. 314.
- 2025-11-04: Reported (Amended) by the Committee on Financial Services. H. Rept. 119-362.
- 2025-11-04: Reported (Amended) by the Committee on Financial Services. H. Rept. 119-362.
- 2025-09-16: Ordered to be Reported (Amended) by the Yeas and Nays: 51 - 0.
- 2025-09-16: Committee Consideration and Mark-up Session Held
- 2025-05-07: Referred to the House Committee on Financial Services.
Bill Versions
- Keeping Deposits Local Act — issued 2026-05-20 — PDF (6 pages)
- 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. — issued 2025-05-07 — PDF (3 pages)
- Keeping Deposits Local Act — issued 2026-05-21 — PDF (5 pages)
- Keeping Deposits Local Act — issued 2025-11-04 — PDF (6 pages)