The U.S. House of Representatives unanimously passed legislation on Wednesday that would provide local banks with additional flexibility regarding reciprocal deposits.
The Keeping Deposits Local Act would amend the Federal Deposit Insurance Act to modify the amount that an insured depository institution’ reciprocal deposits can be considered funds obtained by or through a deposit broker, and for other purposes. Community banks would have the ability to accept a greater amount of reciprocal deposits before becoming subject to brokered-deposit regulations. The bill excludes most reciprocal deposits from being treated as brokered deposits.
House Majority Whip Tom Emmer (R-MN) introduced the bill in May 2025, and the House Financial Services Committee advanced the bill in September.
“The Keeping Deposits Local Act, which has been a priority for nearly a decade, passed the House today with nonpartisan support,” Emmer said following the bill’s passage. “Our bill gives local banks the flexibility they need to grow, compete, and invest in their communities. We’re fostering local, relationship-oriented banking by helping protect deposits, supporting lending, and keeping dollars invested in the communities where they belong. We urge our Senate colleagues to pass this bill quickly.”
The bill has the support of the Minnesota Bankers Association and Independent Community Bankers of America.