Custodial deposit and eligible institution are defined
What the document says“``(i) An insured depository institution serving as agent, trustee, or custodian. ``(ii) A trust entity controlled by an insured depository institution serving as agent, trustee, or custodian. ``(iii) A State-chartered trust company serving as agent, trustee, or custodian.”
The new subsection defines a custodial deposit as one placed for the benefit of a third party by a bank, a bank-controlled trust entity, a State-chartered trust company, or a plan administrator or investment advisor acting in a formal custodial or fiduciary role, and that would otherwise count as obtained through a deposit broker. An eligible institution is a bank taking such deposits with less than $10,000,000,000 in total assets that was rated 1, 2, or 3 at its last examination and is well capitalized, or that has a waiver.
What the document actually says“``(i) An insured depository institution serving as agent, trustee, or custodian. ``(ii) A trust entity controlled by an insured depository institution serving as agent, trustee, or custodian. ``(iii) A State-chartered trust company serving as agent, trustee, or custodian.”
The deposit may be placed by a bank acting for somebody else. It may be placed by a trust arm of a bank. It may be placed by a trust company chartered by a state.
The person placing the money holds it for another. That is what makes it custodial. The bank taking it must be small and in sound shape.
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