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Congress·Reported·4 months ago

Congress Moves to Let Some Community Banks Count More Custodial Deposits as Non-Brokered Funds

Also known as: Community Bank Deposit Access Act of 2025

Legislative Progress

✓ Filed
Review
House
Senate
President

Impacts

Mixed Impacts(1)
Retiree
Neutral

Key Points

  • Lets certain smaller, well-capitalized banks treat some custodial deposits as regular deposits, not “brokered” money.
  • Applies to banks under $10 billion in assets, and generally only if exams rate them in good shape and they meet “well capitalized” standards.
  • Sets a cap: these custodial deposits can only get this special treatment up to 20% of the bank’s total liabilities.
  • Defines custodial deposits as money placed through a trustee/custodian setup (like for retirement plans) mainly to keep deposit insurance for someone else’s benefit.
  • Adds a limit on how much interest a bank can pay on these custodial deposits if it later is no longer well capitalized, to discourage risky “rate chasing.”
EconomyConsumer Protection

Milestones

3 milestones6 actions
Nov 4, 2025House

Placed on the Union Calendar, Calendar No. 321.

Nov 4, 2025House

Reported (Amended) by the Committee on Financial Services. H. Rept. 119-369.

Sep 16, 2025House

Ordered to be Reported (Amended) by the Yeas and Nays: 48 - 2.

Sep 16, 2025House

Committee Consideration and Mark-up Session Held

Sep 11, 2025House

Referred to the House Committee on Financial Services.

What Happens Next

Projected impacts based on AI analysis

Within months after the bill becomes law

Bank regulators (especially the FDIC) update guidance on when custodial deposits are not treated as brokered deposits (up to the 20% cap).

Community banks and financial firms get clearer rules, which can change where custodial cash is placed and which banks can accept it.

After regulators clarify the rule and banks update internal policies

Eligible community banks adjust deposit strategies to take in more qualifying custodial deposits, or to stay under the 20% of liabilities limit.

Some banks may have more stable funding to support local lending; others may turn away additional custodial cash once they hit the cap.

Whenever a covered bank’s capital status drops

If an eligible bank later becomes not well capitalized, the interest-rate limits on newly accepted custodial deposits apply.

A weakening bank cannot lure custodial money by paying unusually high rates, which may reduce risk but can also lower returns for those deposits.

Related News

5 articles
Dodd Frank Update (October Research)·5 months ago

House FSC passes five bills supported by community banking advocates

Recaps House Financial Services Committee action; notes H.R. 5317 passed 49-2 and would let qualifying community banks treat certain custodial deposits as non-brokered up to 20% of liabilities.

C=
Independent Community Bankers of America (ICBA)·6 months ago

ICBA-supported bills slated for House committee markup today

Preview of House Financial Services Committee markup lists H.R. 5317 and summarizes its custodial-deposit exception from brokered-deposit treatment (20% of liabilities cap).

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American Fintech Council·5 months ago

American Fintech Council (AFC) Applauds Introduction of the Community Bank Deposit Access Act

Industry group statement praising advancement of H.R. 5317; frames it as supporting bank–fintech custodial deposit arrangements by distinguishing them from brokered deposits.

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Source Information

Document Type

Congressional Bill

Official Title

Community Bank Deposit Access Act of 2025

Bill NumberHR 5317
Congress119th Congress
ChamberHouse of Representatives
Latest ActionPlaced on the Union Calendar, Calendar No. 321.

Sponsor

Analysis generated by AI. While we strive for accuracy, this should not be considered legal or professional advice. Always verify information with official government sources.