Sponsor
French Hill
Representative · R-AR
Representative · R-AR
The bill gives small community banks and ERISA plans more limited insured deposit options and clarifies statutory caps—slightly boosting Treasury receipts—while introducing caps and price restrictions that can constrain some banks' liquidity and raise compliance costs for plan sponsors, producing modest fiscal benefit but meaningful operational trade‑offs for affected institutions.
Small, well‑capitalized community banks can accept custodial deposits up to 20% of liabilities without those deposits being treated as brokered, helping those banks retain or attract funding and support local lending capacity.
ERISA plan sponsors and administrators gain more insured deposit placement options, which can increase insured coverage and reduce uninsured exposure for plan beneficiaries.
Limits on excessive interest payments for institutions that become undercapitalized help protect the deposit insurance fund and taxpayers by reducing incentives that could increase FDIC losses.
Covered institutions that become undercapitalized face price restrictions that could make it harder to attract emergency funding, potentially accelerating liquidity stress and increasing systemic risk exposure (affecting banks and taxpayers).
Banks that rely on custodial deposits may hit the 20% cap and thus face constrained liquidity options, which could limit funding flexibility for some community banks.
Plan sponsors, custodians, and administrators may incur higher operational complexity and compliance costs to track caps, eligibility, and market‑area rate rules, with those costs potentially passed on to plan beneficiaries.
Based on analysis of 3 sections of legislative text.
Allows certain plan ‘‘custodial deposits’’ at eligible small, well‑capitalized banks to avoid brokered‑deposit treatment up to 20% of liabilities, and lowers the Fed surplus cap by $4M effective 9/1/2036.
Creates a narrow exception that allows certain retirement-plan "custodial deposits" to be treated as non‑brokered deposits at small, well‑capitalized banks (or banks with an approved waiver) up to 20% of the bank’s total liabilities, with limits on paying interest if the bank is undercapitalized. Also reduces the statutory cap on Federal Reserve banks’ aggregate surplus funds by $4,000,000, with that surplus-cap change taking effect September 1, 2036.
Official title: Community Bank Deposit Access Act of 2025
Introduced September 11, 2025 by French Hill · Last progress May 21, 2026