Keeping Deposits Local Act

Key Points

• This bill changes how the government treats reciprocal deposits, which are a way for people with large accounts to keep their money in local banks while staying fully insured. It allows banks to hold more of these deposits without them being labeled as brokered deposits, which are usually subject to stricter and more expensive regulations.
• The goal is to help community banks keep more money in their local areas. When banks can keep these deposits, they have more cash available to provide loans to local small businesses and families instead of the money being moved to large national institutions.
• The plan also expands which banks can use this system. It would allow banks with average safety ratings to participate, whereas current rules often limit this to only the highest-rated banks.
• The government would conduct a new study to see how these deposits have worked since 2018. This study will look at how stable the money is during times of financial stress and how it helps groups like local governments and non-profit organizations.

Impact Analysis

Govbase has not yet run an impact analysis on this legislation.