Bill > HR5317

This bill amends the Federal Deposit Insurance Act to create a new exception for custodial deposits at smaller banks, allowing these institutions to accept certain types of deposits without being classified as deposit broker funds. Specifically, the bill permits eligible banks with less than $10 billion in assets and a strong financial rating to hold custodial deposits up to 20% of their total liabilities. Custodial deposits are defined as funds deposited for the purpose of maintaining deposit insurance on behalf of a third party, which can be managed by various entities like trustees, plan administrators, or investment advisors. The bill also includes an interest rate restriction for banks that are not "well capitalized" (a technical term referring to specific financial health standards), preventing these institutions from offering significantly higher interest rates on custodial deposits compared to market rates. The goal of the legislation appears to be providing more flexible deposit-taking options for smaller community banks while maintaining safeguards against risky financial practices.

Business and Industry

https://www.congress.gov/bill/119th-congress/house-bill/5317/all-info