Keeping Deposits Local Act

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 3234) to amend the Federal Deposit Insurance Act to modify the amount of reciprocal deposits of an insured depository institution that are not considered to be funds obtained by or through a deposit broker, and for other purposes, as amended.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days to revise and extend their remarks and include extraneous material for this bill.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I include in the Record the CBO estimate for this bill.

Legislation Considered Under Suspension of the Rules

The Majority Leader of the House of Representatives

announces bills that will be considered under suspension of

the rules in that chamber. Under suspension, floor debate is

limited, all floor amendments are prohibited, points of order

against the bill are waived, and final passage requires a

two-thirds majority vote.

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Committee on the Budget, CBO estimates the effects of those

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to review the legislation before consideration. Although it

is possible in most cases to determine whether the

legislation would affect direct spending or revenues, time

may be insufficient to estimate the magnitude of those

effects. If CBO has prepared estimates for similar or

identical legislation, a more detailed assessment of

budgetary effects, including effects on spending subject to

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Mr. Speaker, I rise in support of H.R. 3234, the Keeping Deposits Local Act, and I thank my longtime friend and our majority whip, Tom Emmer of Minnesota, and Congresswoman Joyce Beatty for their tremendous bipartisan leadership on this particular matter.

I also thank the ranking member of our full committee, the House Financial Services Committee, for her continued willingness to work across the aisle on cornerstone reforms that benefit our Nation's community banks.

Community banks are one of the most important economic drivers behind Main Street. They deserve a regulatory framework that encourages them to compete, grow, and better serve their customers.

Reciprocal deposits are a proven tool that helps banks attract, retain, and diversify their funding sources while simultaneously giving depositors greater FDIC insurance coverage.

As a former community bank CEO, I personally used this service to help provide better service for important customers.

Right now, overly burdensome broker deposit regulations are standing in the way. Community banks, many of which operate with a limited branch network, are being penalized for using a funding tool that poses no meaningful risk to financial stability.

Majority Whip Emmer and Congresswoman Beatty's bill addresses this issue. It allows community banks to accept a greater volume of reciprocal deposits before triggering the overly stringent broker deposit rules. This, in turn, frees up more capital to make loans in the communities they serve.

Additionally, as a bank's size increases, the threshold for reciprocal deposits that it may accept decreases, ensuring that oversight scales with risk.

The bill also directs the FDIC to study reciprocal deposits and report back to Congress, ensuring that we have the data to inform direction on deposit insurance policy.

This is the kind of smart, targeted reform that has been at the heart of my efforts to make community banking great again in our legislative agenda in this 119th Congress.

I am proud to support this bill by Mr. Emmer, and I urge my colleagues to do the same. Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I want to recognize the author of this important bill from the Republican side that helps our community banks better serve their customers through a diverse approach to deposit insurance.

Mr. Speaker, I yield 2 minutes to the gentleman from Minnesota (Mr. Emmer), who is the majority whip of the Republican-led House.

Mr. Speaker, I am prepared to close, and I reserve the balance of my time.

Mr. Speaker, I thank, again, Whip Emmer and Mrs. Beatty for their tireless work on this. It has taken a lot of years of collaboration between both parties on both sides of the aisle to find a path to move this bill forward, and we couldn't have done it without the hard work of the gentleman from Minnesota and the gentlewoman from Ohio. I am grateful for their work.

I recommend everybody on both sides of the aisle support this bill, and I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise in support of H.R. 3234, the Keeping Deposits Local Act, sponsored by Representative Emmer and our former Diversity and Inclusion Subcommittee chairwoman, Mrs. Joyce Beatty.

I appreciate the sponsors' bipartisan work on this bill. In 2018, I worked with them to establish the initial framework for the so-called reciprocal deposits.

When a business comes to a bank and deposits, say, $1 million to cover payroll and other expenses, the FDIC only ensures up to $250,000.

To help these customers receive deposit insurance on all of their deposits, banks can send a deposit over the $250,000 cap to another bank in exchange for a separate deposit from the receiving bank, which is known as a reciprocal deposit.

The product has become popular, especially after the dramatic failures of Silicon Valley Bank and two other regional banks in 2023 because businesses wanted to make sure they don't have any uninsured deposits. This bill would increase the limits we set back in 2018 based on a bank's size.

Now, megabanks don't need our help because they are, unfortunately, still perceived as too big to fail. In fact, a number of small businesses moved their deposits to megabanks after the 2023 regional bank failures.

I appreciate that the chairman and the sponsors worked with me to address my concerns that an earlier version of this bill would have been a windfall for megabanks. It has been revised to ensure the bill prioritizes support for smaller community and midsize banks like MDIs and CDFI banks.

There is more that we should do than just this bill. Since 2007, there have been at least 37 bank failures where emergency tools were not used to protect depositors because the bank was too small. As a result, small business customers with more than $250,000 lost money through no fault of their own when their bank failed. That is not fair.

After convening a roundtable with industry experts and consulting extensively with our former chairman, Mr. McHenry, I introduced my bill, H.R. 4551, the Employee Paycheck and Small Business Protection Act.

Under my bill, the government would take a data-driven approach, conduct an extensive analysis, and then propose an increase to the $250,000 deposit insurance threshold for business payment accounts. There would be multiple opportunities for stakeholders to weigh in as the proposal gets developed, with extensive congressional oversight.

Furthermore, my bill would allow regulators to do an emergency Transaction Account Guarantee, or TAG, program for up to 9 months, just like the FDIC did in the 2008 crisis, to protect depositors from harm in a major crisis.

My bill would help protect all small businesses and their employees while helping community banks and credit unions better serve their communities. This concept has broad support, including several House Republicans recently introducing their own bills, along with a bipartisan effort in the Senate. Moreover, Vice President Vance and Treasury Secretary Bessent are strongly supportive of these efforts.

In a letter from when we marked up this bill we are considering today, the Independent Community Bankers of America wrote: ``ICBA looks forward to working with the committee on the broader, comprehensive deposit insurance coverage level debate and ensuring more small businesses can have important protection for their deposits.''

We should do more, Mr. Speaker, but in the meantime, I urge my colleagues to support H.R. 3234, which will complement broader deposit insurance reform efforts.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 3 minutes to the gentlewoman from Ohio (Mrs. Beatty), who is the co-lead on the bill.

Mr. Speaker, I have no further speakers, and I yield myself the balance of my time to close.

Mr. Speaker, this is a good bill that will help community banks. The bill is supported by the National Bankers Association and the Community Development Bankers Association, and I am very pleased to support it.

As we have discussed, there is more Congress can do to update the deposit insurance reform framework to ensure it is working for community banks, for midsize banks, for MDIs and CDFIs, for rural banks, and all of their customers, especially the small businesses, nonprofits, churches, and other organizations and their workers.

Let's pass comprehensive deposit insurance reform into law without further delay. In the meantime, I, again, urge my colleagues to support this bill, and I yield back the balance of my time.

Mr. Speaker, I rise in support of my bill, H.R. 3234, the Keeping Deposits Local Act, which I am very proud to co-lead with Congressman Emmer.

This bill modernizes the treatment of reciprocal deposits to help small banks and midsize banks improve liquidity, increase local community lending, and better compete for larger accounts, all without jeopardizing the safety and the soundness of our financial system.

Following the bank failures in 2023, we have seen many banks turn to reciprocal deposits to meet consumer demand, to increase their insured deposits, and, really, to prevent capital flight.

However, community banks across the country and regional banks like in my home district, banks like Huntington, Fifth Third, and KeyBank are quickly running up against the current $5 billion or 20 percent threshold that was established in 2018.

This means that they are limited in their capacity to attract deposits from nonprofits, small businesses, and local governments and municipalities that want to support economic and community development.

To solve this problem, this bill replaces the current cap with a tiered system to ensure that the greatest benefit goes to the banks that need it the most: minority depository institutions, MDIs; community development financial institutions, or CDFIs; and inner-city, rural, and small banks at the front lines of providing financial services to underserved communities.

Mr. Speaker, increasing nonbrokered treatment of reciprocal deposits will greatly support these institutions by allowing them to access stable funding to help finance affordable housing projects, small business loans, and community infrastructure.

That is why I am proud to say that this bill has the support of the Ohio Bankers League and the Ohio regional banks. It is a bipartisan bill.

Mr. Speaker, I thank our chairman, Congressman Hill, and I thank my ranking member, Congresswoman Maxine Waters, for supporting and pushing this bill forward. I urge my colleagues to support the passage of this bill.

Mr. Speaker, I thank Chairman Hill for yielding.

Mr. Speaker, reciprocal deposits are secure, fully FDIC-insured deposits that enable community banks to retain local funds, while at the same time ensuring those deposits remain protected.

In 2018, Congress enacted nonpartisan legislation recognizing that most reciprocal deposits should not be treated as brokered deposits. I was proud to lead that initiative then, and I am proud to build on that progress with the bill before us today.

Since the enactment of S. 2155 nearly 8 years ago, many banks have turned to these low-cost, core deposits, as they have approached the current limits of the lesser of $5 billion or 20 percent of total liabilities.

In response, my colleague, Representative Beatty, and I introduced the Keeping Deposits Local Act, a nonpartisan bill that updates existing thresholds so that community and regional banks can more easily qualify for nonbrokered treatment of reciprocal deposits.

Simply put, this bill brings our laws in line with today's economic realities. It gives banks much-needed flexibility and offers local communities better access to capital, all while making our banking system more resilient.

I thank Chairman Hill for his tireless work and advocacy on this issue, and I encourage all of our colleagues to support this bill. Let's give our local banks the tools they need to grow, compete, and invest in Main Street.

Mr. Speaker, I missed votes today due to a family emergency. Had I been present, I would have voted YEA on Roll Call No. 176 (Agreeing to H. Res. 1299), YEA on Roll Call No. 177 (Passage of H.R. 3234), YEA on Roll Call No. 178 (Passage of H.R. 4544), YEA on Roll Call No. 179 (Passage of H.R. 5317), YEA on Roll Call No. 180 (Passage of S. 2393), YEA on Roll Call No. 181 (Passage of S. 1003), YEA on Roll Call No. 182 (Passage of H.R. 1993), YEA on Roll Call No. 183 (MTR for H.R. 2616), NO on Roll Call No. 184 (Passage of H.R. 2616), NAY on Roll Call No. 185 (Previous Question, H. Res. 1300), and NO on Roll Call No. 186 (Adoption of H. Res. 1300).