House · HR 3234 · 119th Congress
Keeping Deposits Local Act
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Summary
This bill lets banks accept more reciprocal deposits without those deposits being labeled as brokered funds. Reciprocal deposits allow large depositors to spread money across many banks so more of it is insured. The new rules use a tiered system based on a bank's size and loosen the health rating banks need to qualify.
In Favor
Businesses and local governments often hold balances far above standard FDIC limits and need full insurance coverage. Reciprocal deposit networks provide that coverage without forcing them to split accounts across many banks. This bill raises the cap on qualifying reciprocal deposits so more community banks can offer this service and compete for those accounts.
Against
The bill lets banks with weaker health ratings access more of these deposits. A CAMELS rating of 3 means regulators have real concerns about a bank's condition. Letting shakier banks take on more of these large deposits could increase risk to the federal deposit insurance fund.
Additional Considerations
Purpose & Problem
Is the problem real and worth federal action?
The bill raises the amount of reciprocal deposits that banks can accept without those funds being labeled as brokered deposits, aiming to help banks offer more deposit insurance coverage to large depositors like businesses and local governments.
Scope & Related Provisions
Does it stay focused, or carry unrelated add-ons?
The bill mostly stays on its core topic, but Section 5 adds one unrelated item: it reduces the Federal Reserve's surplus fund by $28,000,000, with that change taking effect on September 1, 2036.
Who Is Affected
Who benefits, and who bears the cost?
Banks that accept reciprocal deposits can take in more of them under new rules. Large depositors such as businesses, nonprofit groups, and local governments may have access to more insured coverage. The Federal Reserve loses a portion of its surplus fund.
Cost & Funding
Is it affordable and responsibly funded?
The bill does not authorize new spending or charge new fees for its main provisions. Section 5 reduces the Federal Reserve's surplus fund by $28,000,000, a figure stated in the bill itself. No CBO cost estimate appears in the sources.
Risks & Implementation
What could go wrong in practice?
Regulators must apply a new tiered formula based on each bank's total liabilities, which requires them to verify and track that data. The FDIC must also complete a study and deliver a report to Congress within six months of the bill becoming law.
For the actual bill text, see congress.gov.
AI-generated · Published 6/5/2026