Sponsor
French Hill
Representative · R-AR
Representative · R-AR
The bill helps small community banks hold more insured custodial deposits and gives fiduciaries clearer placement rules, while imposing interest limits on undercapitalized institutions (which could shift deposits to larger players), adding compliance and administrative burdens, and modestly reducing the Fed's surplus.
Small community banks (eligible institutions under $10B) can take custodial deposits up to 20% of liabilities without those funds being treated as brokered deposits, making it easier for local banks to hold more insured deposits and support community lending.
Plan administrators and fiduciaries (e.g., retirement and trust managers) get clearer rules on placing deposits to maintain FDIC insurance, reducing legal uncertainty and risk for retirement and trust funds.
Federal Reserve banks will retain slightly less in aggregate surplus over time, which modestly increases receipts or distributions to the Treasury.
Institutions that are undercapitalized face caps on the interest they may offer for custodial deposits, which can reduce their ability to attract liquidity and may push yield‑seeking depositors toward larger banks or nonbank products, concentrating funds away from small banks.
Creating and enforcing a national rate methodology and related rules will increase compliance and supervisory workload for the FDIC and impose new administrative burdens on small banks.
Reducing aggregate Federal Reserve surplus slightly lowers the Fed's internal loss-absorption buffer, marginally decreasing its capacity to absorb future losses.
Based on analysis of 3 sections of legislative text.
Allows small, well-capitalized banks to treat custodial deposits differently (20% exclusion) and caps interest for undercapitalized banks; trims Fed surplus cap by $4M effective 2036-09-01.
Creates a limited exception allowing small, well-capitalized community banks (under $10 billion in assets) to accept certain "custodial deposits" without those funds counting as brokered deposits up to 20% of the bank's liabilities, while imposing an interest-rate cap on custodial deposits taken by institutions that are not well capitalized. Also reduces the statutory aggregate surplus cap for Federal Reserve banks by $4,000,000, with that change taking effect September 1, 2036. The bill defines eligible institutions, custodial deposits, and covered institutions; sets a 20% liability threshold for the exception; limits which banks may use it; and requires the FDIC (the Corporation) to set a national comparable-rate methodology for enforcing the interest restriction on undercapitalized institutions that accept custodial deposits.
Official title: Community Bank Deposit Access Act of 2025
Introduced September 11, 2025 by French Hill · Last progress May 21, 2026