Sponsors (12)
This bill increases clarity and short‑term liquidity access for qualifying banks and provides a quick study to guide policy, but it raises risks to depositors and taxpayers and may concentrate deposits and compliance burdens on smaller, regional, and rural banks.
Banks serving as agent institutions (especially larger, higher-rated banks) can treat a larger, predictable share of reciprocal deposits as non-brokered, making liquidity management and deposit distribution easier.
Banks, the FDIC, and other regulators face clearer, more predictable rules (explicit percentage caps and reliance on the most recent exams), reducing regulatory uncertainty about eligibility and deposit classification.
Insured depository institutions with recent CAMELS ratings of 1–3 retain the ability to serve as agent institutions, preserving access to reciprocal/brokered deposit services and liquidity for those banks.
Taxpayers and depositors could face greater risk if a larger volume of reciprocal deposits is treated as core funding instead of brokered, weakening protections against fragile funding runs and increasing systemic exposure.
Smaller, regional, and rural banks may be disadvantaged—losing deposit flows and competitive footing as deposit concentration shifts to higher-rated or agent institutions—harming local credit availability and small-businesses.
Some institutions that previously qualified could lose agent status if their most recent CAMELS exam exceeds 3, reducing those banks' ability to access reciprocal deposits and manage liquidity.
Based on analysis of 4 sections of legislative text.
Sets tiered percentage caps for reciprocal-deposit exclusions, narrows agent-institution eligibility to CAMELS 1–3, and mandates an FDIC study with a 6-month report.
Redefines how portions of reciprocal deposits are treated for the brokered-deposit rules by setting a tiered formula that excludes a fixed percentage of an agent bank’s liabilities in three dollar brackets (up to $1B, $1B–$10B, and $10B–$250B) from being labeled as brokered funds. Narrows which banks can qualify as agent institutions by tying eligibility to the most recent section 10(d) examination rating (CAMELS 1–3). Requires the FDIC, with the Federal Reserve’s input, to study reciprocal-deposit usage and risks since 2018 and report findings to congressional banking committees within 6 months of enactment. The changes affect how banks classify certain wholesale deposit arrangements, likely changing funding options and compliance treatment for well-rated banks and altering regulators’ oversight focus; the mandated FDIC study will provide more data on usage by institution size, depositor types, and behavior during stress periods.
Introduced May 7, 2025 by Thomas Earl Emmer · Last progress May 21, 2026