Title: Keeping Capital Local for Underserved Communities Act of 2017
Policy area: Finance and Financial Sector

Summary:
Keeping Capital Local for Underserved Communities Act of 2017
This bill specifies that certain reciprocal deposits shall not be considered to be brokered deposits. (Brokered deposits are subject to additional regulatory requirements, including those related to liquidity.)

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2403 Introduced in House (IH)]

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115th CONGRESS
  1st Session
                                H. R. 2403

     To amend the Federal Deposit Insurance Act to ensure that the 
   reciprocal deposits of an insured depository institution are not 
considered to be funds obtained by or through a deposit broker, and for 
                            other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 8, 2017

  Ms. Moore (for herself, Mr. Emmer, Ms. Maxine Waters of California, 
 Mrs. Carolyn B. Maloney of New York, Mr. Meeks, Mr. Heck, Mr. Pocan, 
  Mr. Clay, Mr. Cleaver, Ms. Sinema, Mr. Stivers, Mr. Pittenger, Mr. 
 Messer, Mr. Zeldin, Mr. Huizenga, Mr. Hill, and Mr. Lucas) introduced 
 the following bill; which was referred to the Committee on Financial 
                                Services

_______________________________________________________________________

                                 A BILL


 
     To amend the Federal Deposit Insurance Act to ensure that the 
   reciprocal deposits of an insured depository institution are not 
considered to be funds obtained by or through a deposit broker, and for 
                            other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Keeping Capital Local for 
Underserved Communities Act of 2017''.

SEC. 2. LIMITED EXCEPTION FOR RECIPROCAL DEPOSITS.

    (a) In General.--Section 29 of the Federal Deposit Insurance Act 
(12 U.S.C. 1831f) is amended by adding at the end the following new 
subsection:
    ``(i) Limited Exception for Reciprocal Deposits.--
            ``(1) In general.--Reciprocal deposits of an agent 
        institution shall not be considered to be funds obtained, 
        directly or indirectly, by or through a deposit broker to the 
        extent that the total amount of such reciprocal deposits does 
        not exceed the lesser of--
                    ``(A) $10,000,000,000; or
                    ``(B) an amount equal to 20 percent of the total 
                liabilities of the agent institution.
            ``(2) Definitions.--In this subsection:
                    ``(A) Agent institution.--The term `agent 
                institution' means an insured depository institution 
                that places a covered deposit through a deposit 
                placement network at other insured depository 
                institutions in amounts that are less than or equal to 
                the standard maximum deposit insurance amount, 
                specifying the interest rate to be paid for such 
                amounts, if the agent institution--
                            ``(i)(I) when most recently examined under 
                        section 10(d) was found to have a composite 
                        condition of outstanding or good; and
                            ``(II) is well capitalized (as defined in 
                        section 38(b)(1)(A));
                            ``(ii) has obtained a waiver pursuant to 
                        subsection (c) of this section; or
                            ``(iii) does not receive an amount of 
                        reciprocal deposits that causes the total 
                        amount of reciprocal deposits held by the agent 
                        institution to be greater than the average of 
                        the total amount of reciprocal deposits held by 
                        the agent institution on the last day of each 
                        of the 4 calendar quarters preceding the 
                        calendar quarter in which the agent institution 
                        was found not to have a composite condition of 
                        outstanding or good or was determined to be not 
                        well capitalized.
                    ``(B) Covered deposit.--The term `covered deposit' 
                means a deposit that--
                            ``(i) is submitted for placement through a 
                        deposit placement network by an agent 
                        institution; and
                            ``(ii) does not consist of funds that were 
                        obtained for the agent institution, directly or 
                        indirectly, by or through a deposit broker 
                        before submission for placement through a 
                        deposit placement network.
                    ``(C) Deposit placement network.--The term `deposit 
                placement network' means a network in which an insured 
                depository institution participates, together with 
                other insured depository institutions, for the 
                processing and receipt of reciprocal deposits.
                    ``(D) Network member bank.--The term `network 
                member bank' means an insured depository institution 
                that is a member of a deposit placement network.
                    ``(E) Reciprocal deposits.--The term `reciprocal 
                deposits' means deposits received by an agent 
                institution through a deposit placement network with 
                the same maturity (if any) and in the same aggregate 
                amount as covered deposits placed by the agent 
                institution in other network member banks.''.
    (b) Interest Rate Restriction.--Subsection (e) of section 29 of the 
Federal Deposit Insurance Act (12 U.S.C. 1831f(e)) is amended to read 
as follows:
    ``(e) Restriction on Interest Rate Paid.--
            ``(1) In general.--An insured depository institution that--
                    ``(A) under subsection (c) or (d), accepts funds 
                obtained, directly or indirectly, by or through a 
                deposit broker, or
                    ``(B) while acting as an agent institution under 
                subsection (i), accepts reciprocal deposits (as defined 
                in such subsection) while not well capitalized (as 
                defined in section 38(b)(1)(A)),
        may not pay a rate of interest on such funds or reciprocal 
        deposits which, at the time that such funds or reciprocal 
        deposits are accepted, significantly exceeds the limit set 
        forth in paragraph (2).
            ``(2) Limit on interest rates.--The limit on the rate of 
        interest referred to in paragraph (1) shall be--
                    ``(A) the rate paid on deposits of similar maturity 
                in such institution's normal market area for deposits 
                accepted in the institution's normal market area; or
                    ``(B) the national rate paid on deposits of 
                comparable maturity, as established by the Corporation, 
                for deposits accepted outside the institution's normal 
                market area.''.
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