H.R. 5317 — Community Bank Deposit Access Act of 2025, as amended
Executive Summary
H.R. 5317, the 'Community Bank Deposit Access Act of 2025,' amends the Federal Deposit Insurance Act to exempt certain custodial deposits from being classified as 'brokered deposits' for community banks. Currently, brokered deposits are subject to strict regulatory scrutiny and higher FDIC assessment rates because they are viewed as volatile 'hot money.' By capping this exemption at 20% of total liabilities and restricting it to well-capitalized institutions under $10 billion in assets with strong CAMELS ratings, the bill aims to help community banks access stable funding sources without triggering punitive regulatory treatment, while maintaining guardrails against excessive risk-taking.
Arguments For
- Economic Growth: Levels the playing field for community banks by removing punitive 'brokered deposit' classifications for stable custodial funds, lowering their cost of capital and allowing them to lend more locally.
- Political Cover: Framed strictly as a 'community bank' lifeline with robust guardrails (under $10B assets, strong CAMELS ratings, interest rate caps) to distance the policy from the risky liquidity practices of larger failed regional banks.
Likely Supporters
Arguments Against
- Opposition Attack Line: Loosens liquidity risk metrics, allowing banks to mask volatile 'hot money' as stable deposits, potentially threatening the FDIC Deposit Insurance Fund if a bank run occurs.
- Implementation Risk: FDIC examiners may struggle to consistently differentiate between exempt custodial deposits and traditional brokered deposits, leading to regulatory friction and compliance costs.
Likely Opponents
📋 Key Provisions
- Exempts custodial deposits from being classified as brokered deposits for eligible institutions, provided they do not exceed 20% of the institution's total liabilities.
- Defines an 'eligible institution' as an insured depository institution with less than $10 billion in total assets, a composite CAMELS rating of 1, 2, or 3, and well-capitalized status.
- Prohibits 'covered insured depository institutions' (those that fall below well-capitalized status) from paying interest rates on custodial deposits that significantly exceed local or national market rates.
- Reduces the Federal Reserve's discretionary surplus fund by $4 million as a budgetary offset, effective September 1, 2036.
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Caps the custodial deposit exception at 20 percent of total liabilities.
"equal to 20 percent of the total liabilities"
Restricts eligibility to institutions with less than $10 billion in total assets.
"than $10,000,000,000 in total assets as re-"
Reduces the Federal Reserve surplus fund by $4 million to offset costs.
"U.S.C. 289(a)(3)(A)) is reduced by $4,000,000."