Summary

Changes the FDIC rules for how reciprocal deposits placed through agent institutions are treated for brokered-deposit purposes by creating three liability-based tiers that exempt portions of an agent’s reciprocal deposits from being classified as brokered. It also broadens which banks can qualify as an "agent institution" by allowing institutions with CAMELS-equivalent ratings of 1, 2, or 3 to qualify. Finally, it requires the FDIC, working with the Federal Reserve, to study reciprocal-deposit usage and risks since 2018 and report findings to congressional banking committees within six months of enactment.

• Creates three liability-based tiers that exempt set percentages of an agent institution’s reciprocal deposits from being treated as brokered deposits.
• Exempt percentages: 50% for liabilities up to $1B; 40% for the slice from $1B to $10B; 30% for the slice from $10B to $250B.
• Revises the definition of "agent institution" so banks with most recent CAMELS-equivalent ratings of 1, 2, or 3 qualify.
• Requires the FDIC, with the Federal Reserve, to study reciprocal deposit usage and risks dating back to 2018 and report to congressional banking committees within six months.
• Affects how banks classify reciprocal deposits for brokered-deposit rules, which can influence liquidity and funding strategies.
• Does not change deposit insurance coverage levels or create new appropriations or tax provisions.
• The study must analyze use by institution size, behavior under stress, comparisons to other deposit arrangements, and, where practicable, end-user depositors such as municipalities, businesses and nonprofits.
• Applies to institutions with up to $250 billion in liabilities in the tiering language; larger- or smaller-sized banks will be affected differently depending on their liability size.