IN THE SENATE OF THE UNITED STATES
June 29, 2017
Mr. Warner (for himself, Mr. Moran, Ms. Heitkamp, Mr. Perdue, Mr. Menendez, Mr. Boozman, and Mr. Van Hollen) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs
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.
This Act may be cited as the
Keeping Capital Local for Underserved Communities Act of 2017.
Limited exception for reciprocal deposits
Section 29 of the Federal Deposit Insurance Act (12 U.S.C. 1831f) is amended by adding at the end the following:
Limited exception for reciprocal deposits
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—
an amount equal to 20 percent of the total liabilities of the agent institution.
In this subsection:
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—
when most recently examined under section 10(d) was found to have a composite condition of outstanding or good; and
is well capitalized (as defined in section 38(b)(1));
has obtained a waiver pursuant to subsection (c) of this section; or
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.
The term covered deposit means a deposit that—
is submitted for placement through a deposit placement network by an agent institution; and
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.
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.
Network member bank
The term network member bank means an insured depository institution that is a member of a deposit placement network.
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.
Interest rate restriction
Section 29 of the Federal Deposit Insurance Act (12 U.S.C. 1831f) is amended by striking subsection (e) and inserting the following:
Restriction on interest rate paid
In this subsection, the term covered insured depository institution means an insured depository institution that—
under subsection (c) or (d), accepts funds obtained, directly or indirectly, by or through a deposit broker; or
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 covered insured depository institution may not pay a rate of interest on funds or reciprocal deposits described in paragraph (1) that, at the time that the funds or reciprocal deposits are accepted, significantly exceeds the limit set forth in paragraph (3).
Limit on interest rates
The limit on the rate of interest referred to in paragraph (2) shall be—
the rate paid on deposits of similar maturity in the normal market area of the covered insured depository institution for deposits accepted in the normal market area of the covered insured depository institution; or
the national rate paid on deposits of comparable maturity, as established by the Corporation, for deposits accepted outside the normal market area of the covered insured depository institution.