Community Bank Deposit Access Act of 2025

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 5317) to amend the Federal Deposit Insurance Act to ensure that certain custodial deposits of well capitalized insured depository institutions are not considered to be funds obtained by or through deposit brokers, and for other purposes, as amended.

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

Mr. Speaker, I include in the Record the Congressional Budget Office estimate for the bill.

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

Mr. Speaker, I will speak in support of H.R. 5317, the Community Bank Deposit Access Act.

This is a bill that over my time in Congress I have introduced several times and worked with colleagues to extend the ability to attract deposits to local community banks to make them more competitive.

This bill works to essentially give community banks greater flexibility to access stable and reliable funding sources so that they can continue to meet the financial needs of the communities they serve.

Community banks, as we have talked about today, play a vital role in our local economies by supporting small businesses, farmers, and consumers who depend on them for access to credit and other essential financial services.

That is why it is important that our community institutions have access to a diverse and dependable set of funding sources so that they can continue to meet these demands.

One source of funding comes through custodial deposits, which are the funds placed at a bank by a third party on behalf of underlying customers or beneficiaries who own the funds but may not have a direct banking relationship with that institution.

Mr. Speaker, a few minutes ago, we talked about reciprocal deposits. Let's say I am a small business, and I have $500,000 as a typical average collected balance in my business, but I only have deposit insurance of $250,000. The reciprocal deposit bill that Mrs. Beatty offered a few minutes ago with Tom Emmer of Minnesota allows that other $250,000 for that small business to be covered for deposit insurance. That is very important and very useful to have that customer-bank service relationship.

Custodial deposits are similar, but what if it is a much larger amount of money, a much bigger business? Custodial deposits allow banks to serve their customer that way with one statement by seeing the money spread across more banks.

This is a cash management product that allows a local community bank to play a lead role in Treasury management for a larger commercial customer.

Let's say, for example, a landlord might place tenant security deposits in a custodial account at a local bank, even though the tenants remain the ultimate owner of those funds and, hence, the ability to be benefited by that.

These arrangements provide benefits to all of the parties involved. Banks gain access to stable, low-cost deposits, while customers and third parties benefit from the convenience of a more centralized account management function, along with the protections provided by deposit insurance.

The FDIC has long recognized this deposit insurance process and how it can apply on a pass-through basis, meaning that underlying funds remain insured so long as each beneficiary's share stays within the applicable deposit insurance limit.

My bill would expand access to these arrangements for banks under $10 billion in assets that maintain strong capital levels and sound supervisory ratings or otherwise receive a waiver from their primary bank regulator.

Custodial deposits are a stable relationship-based funding source that allows a community bank to support small businesses, families, and local economies.

These deposits can provide smaller institutions with access to depositors and funding relationships that might otherwise be out of reach and help diversify their funding base and improve their financial stability.

Yet, under current law, many of these deposits are treated the same as if they were brokered deposits and subject to rules that were never intended for these type of relationship accounts.

This outdated treatment creates unnecessary burdens for community banks and limits their ability to responsibly utilize custodial deposits to support lending in their communities.

By clarifying that custodial deposits are not brokered deposits, if they do not exceed 20 percent of the total liabilities of the community bank, my bill gives lenders the certainty they need to accept these funds and put that money to work in their communities.

This is a commonsense, bipartisan solution that strengthens community banks, supports local lending, and preserves the safety and soundness of the financial system without increasing the risk to our Deposit Insurance Fund.

Mr. Speaker, I urge all of my colleagues to support this bill, and I reserve the balance of my time.

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

Mr. Speaker, I yield myself the balance of my time.

Mr. Speaker, let me say I appreciate the gentlewoman's engagement on deposit insurance policy at large. I think it is an important topic. She and I both share the importance of reviewing our deposit insurance system, make sure it is competitive, make sure it encourages safe and sound banking, make sure it doesn't expand in any way the moral hazard associated with too much reliance on a government safety net in any way that might encourage too great risk-taking.

She is right. We should do that in a data-dependent way and do that collectively, and we have had assistance in that regard from the FDIC and others.

I am grateful for her cooperation on moving the reciprocal deposit bill earlier today, Mrs. Beatty and Mr. Emmer's bill, this custodial deposit effort. Both of these bills help our community banks be more competitive across the country as they try to grow their business in the face of a lot of competition.

Mr. Speaker, I thank the gentlewoman for her support. I urge a ``yes'' vote on both sides of the aisle, 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. 5317, the Community Bank Deposit Access Act of 2025, sponsored by Chairman Hill.

Let me start by thanking the chairman for his focus on supporting community banks and credit unions, including community development financial institutions, or CDFIs, and minority depository institutions, or MDIs.

This bill will allow community banks to receive so-called custodial deposits from larger banks and then use those funds to lend into their communities.

Custodial deposits are shared between banks in a network, allowing them to provide FDIC insurance on amounts larger than $250,000, although for a fee paid by the MDI or community bank.

Mr. Speaker, the original introduced bill would have provided an unnecessary exemption for the largest banks which, as we have discussed, honestly don't need help competing for deposits. I appreciate that Mr. Hill and his staff worked with us on important improvements to narrow the focus of this bill to just support community banks.

Furthermore, as I have said before, I do not believe this reform will singlehandedly get community banks all the help they need to compete for deposits and acquire more small business customers.

Mr. Speaker, I would again urge the chairman and the supporters of this bill to work with me and support advancing deposit insurance reform, like my bill, which takes a data-driven approach that the chairman said he would prefer, with opportunities for stakeholder input and congressional oversight.

I also commend Representatives Lucas, Barr, Meuser, and Stutzman for recently introducing their own deposit insurance reform bills. I couldn't help but notice their bills have a lot of similarities with my bill and with similar bipartisan reform efforts in the Senate.

It has been more than 15 years since Congress updated our deposit insurance framework, and it is time for Congress to comprehensively update it again.

H.R. 5317 is a good piece of that reform effort, and I urge my colleagues to support the chairman's bill, and I reserve the balance of my time.

Mr. Speaker, I yield myself the balance of my time.

Mr. Speaker, I again thank the chairman for working with me regarding improvements that were made to the bill in markup to ensure it focused on helping community banks.

Custodial deposits are something that community banks can use as a funding source to help them better serve their communities.

I hope today's vote on this bill and the bill of the gentleman from Minnesota (Mr. Emmer) and the gentlewoman from Ohio (Mrs. Beatty) is just the beginning in our efforts to modernize our deposit insurance framework broadly and to provide even more tools for community banks to compete for deposits from local churches, nonprofits, city governments, and small businesses.

Mr. Speaker, I urge the chairman to work with me and our members to advance broad deposit insurance reform.

In the meantime, I urge the House to advance the chairman's bill, which serves as a good, complementary reform to help our smallest banks compete.

Mr. Speaker, I yield back the balance of my time.

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).

Mr. Speaker, I missed a series of votes today. Had I been present, I would have voted YEA on Roll Call No. 182, NAY on Roll Call No. 183, AYE on Roll Call No. 184, YEA on Roll Call No. 185, and AYE on Roll Call No. 186.

Mr. Speaker, I demand a recorded vote.