U.S. Rep. French Hill (R-AR), chairman of the House Committee on Financial Services, introduced legislation that seeks to provide community banks the ability to attract custodial deposits.
The Community Banks Deposit Access Act of 2025 (H.R. 5317) would exclude qualifying custodial deposits from brokered deposit rules. This would help community banks maintain lower funding costs, expand lending opportunities, and better serve their communities.
“As a former community banker, I’ve seen first-hand how outdated regulations place community banks at a disadvantage, stifling their ability to serve as economic engines of growth in our cities and towns,” Hill said. “My common-sense bill would help community banks compete more effectively and provide them greater flexibility to serve their customers all while maintaining strong safety standards.”
Specifically, the bill would amend the Federal Deposit Insurance Act to create a limited exception for certain custodial deposits at eligible institutions. Under this measure, these deposits placed by trusted entities like banks, trust companies, or plan administrators would not be classified as brokered deposits if they do not exceed 20 percent of the institution’s total liabilities.
To be eligible to obtain a waiver, institutions would have to have less than $10 billion in assets and be well-rated as well as well-capitalized.