Placed on the Union Calendar, Calendar No. 321.
The bill amends Section 29 of the Federal Deposit Insurance Act to create a limited exception treating certain "custodial deposits" as not being "brokered deposits" for eligible small insured depository institutions. An eligible institution is defined as an insured depository institution with under $10 billion in assets that is well capitalized (or has obtained a waiver) and meets supervisory rating requirements; custodial deposits up to 20 percent of the institution's total liabilities would be covered by the exception.
Progressives emphasize potential systemic and consumer protection risks and wants stronger transparency and limits; conservatives emphasize deregulatory relief and local bank competitiveness.
Relative to its intended legislative type, this bill is a focused substantive amendment to the Federal Deposit Insurance Act that defines a narrow exception for custodial deposits for smaller, well-capitalized institutions and adds an interest-rate constraint for institutions not well capitalized.
The bill amends Section 29 of the Federal Deposit Insurance Act to create a limited exception treating certain "custodial deposits" as not being "brokered deposits" for eligible small insured depository institutions.
An eligible institution is defined as an insured depository institution with under $10 billion in assets that is well capitalized (or has obtained a waiver) and meets supervisory rating requirements; custodial deposits up to 20 percent of the institution's total liabilities would be covered by the exception.
The bill defines custodial deposits narrowly to include deposits placed by banks, trust entities, state trust companies, plan administrators, or investment advisors acting in a formal custodial or fiduciary capacity to provide deposit insurance for third parties.
On content alone, the bill is a narrowly tailored, low‑salience technical change with built‑in safeguards that make it plausible to garner bipartisan support in committee and the House. The principal impediments are Senate procedural barriers and potential pushback from regulators or competing financial institutions; the absence of a clear fiscal estimate and some ambiguous terms may also slow enactment without further refinement or regulatory guidance.
Relative to its intended legislative type, this bill is a focused substantive amendment to the Federal Deposit Insurance Act that defines a narrow exception for custodial deposits for smaller, well-capitalized institutions and adds an interest-rate constraint for institutions not well capitalized.
Progressives emphasize potential systemic and consumer protection risks and wants stronger transparency and limits; conservatives emphasize deregulatory relief and local bank competitiveness.
Progressives emphasize potential systemic and consumer protection risks and wants stronger transparency and limits; conservatives emphasize deregulatory relief and local bank competitiveness.
A mainstream liberal would view this bill as a targeted relief measure for small local banks that could help community institutions offer insured solutions for customers with large balances.
They would cautiously welcome support for community banks and depositors who need multi-bank insurance arrangements, but remain concerned about the potential for increased risk to the Deposit Insurance Fund and whether the waiver and enforcement language is strong enough.
They would look for additional consumer and worker protections, transparency about who places these custodial deposits, and closer FDIC oversight to prevent regulatory arbitrage.
A pragmatic centrist would see this bill as a narrowly targeted regulatory fix to help smaller, well‑capitalized banks provide custodial deposit services that protect customers' insurance coverage.
They would appreciate the 20 percent cap and the well‑capitalized requirement and view the interest‑rate constraint as a reasonable backstop for institutions that fall into weaker capital positions.
Their main concern would be balancing community bank competitiveness with clear supervisory rules, measurable limits, and clarity about terms like "significantly exceeds." They would likely support the bill with modest technical clarifications and monitoring requirements.
A mainstream conservative would generally favor this bill as a sensible deregulatory relief for community banks that strengthens local banking competition versus large national banks.
They would emphasize that the bill is narrowly tailored (under $10B asset limit, 20 percent cap, well‑capitalized requirement) and removes an overly punitive regulatory label that hindered community banks' capacity to serve depositors.
They may raise minor concerns about the interest‑rate restriction's scope for institutions that later become undercapitalized, but would prefer to avoid added burdens like excessive reporting.
Reached or meaningfully advanced
Reached or meaningfully advanced
Still ahead
Still ahead
Still ahead
On content alone, the bill is a narrowly tailored, low‑salience technical change with built‑in safeguards that make it plausible to garner bipartisan support in committee and the House. The principal impediments are Senate procedural barriers and potential pushback from regulators or competing financial institutions; the absence of a clear fiscal estimate and some ambiguous terms may also slow enactment without further refinement or regulatory guidance.
The House fast-tracked this bill — skipping normal debate — and it passed with a two-thirds majority. It now moves to the Senate.
Suspending the rules allows the House to bypass normal debate procedures and pass a bill immediately with a two-thirds vote.
Progressives emphasize potential systemic and consumer protection risks and wants stronger transparency and limits; conservatives emphasize…
On content alone, the bill is a narrowly tailored, low‑salience technical change with built‑in safeguards that make it plausible to garner…
Relative to its intended legislative type, this bill is a focused substantive amendment to the Federal Deposit Insurance Act that defines a narrow exception for custodial deposits for smaller, well-capitalized instituti…
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