S. 2757 — Keeping Deposits Local Act

This section revises the exception under the brokered deposits prohibition (12 U.S.C. 1831f(a)) for the amount of reciprocal deposits (i.e., deposits exchanged between agent institutions through a deposit broker network) of an agent institution not considered to be funds obtained by or through a deposit broker, replacing the prior structure (unlimited for well capitalized institutions; capped at the average amount held on January 1, 2018, for adequately capitalized institutions without a waiver) with a new tiered cap equal to the sum of: (1) 50% of total liabilities not more than $1 billion; (2) 40% of total liabilities more than $1 billion but not more than $10 billion; (3) 30% of total liabilities more than $10 billion but not more than $250 billion; (4) 20% of total liabilities more than $250 billion but not more than $1 trillion; and (5) 2% of total liabilities more than $1 trillion. (Thus, the revision imposes size-based limits on all agent institutions, regardless of capitalization status.)

This section revises the definition of agent institution for purposes of the reciprocal deposits exception to brokered deposit restrictions to include insured depository institutions assigned a CAMELS composite rating of 1, 2, or 3 (from those found to have a composite condition of outstanding or good). (Thus, more institutions may originate reciprocal deposits—which are excluded from brokered deposit treatment up to the lesser of $5 billion or an amount equal to 20% of total liabilities—while a participating institution is not well capitalized.)