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Increase the supply of housing in America › Section 901

Community Bank Deposit Access

Section 901 · Sec. 901 ·

What this chapter is about

This part changes a banking law about deposits placed by a middleman. Some deposits held for others no longer count that way. The share allowed is up to a fifth of what a small bank owes. A bank that is not well capitalized may not pay a high rate on them.

3 proposals indexed from this chapter.

Custodial deposits up to 20 percent of liabilities are not brokered deposits

The document says “shall not”Who acts: Federal Deposit Insurance CorporationHow: statuteSec. 901 in the PDF
What the document says

“Custodial deposits of an eligible institution shall not be considered to be funds obtained, directly or indirectly, by or through a deposit broker to the extent that the total amount of such custodial deposits does not exceed an amount equal to 20 percent of the total liabilities of the eligible institution.”

To increase the supply of housing in America, and for other purposes, Sec. 901

The section adds a new subsection (j) to section 29 of the Federal Deposit Insurance Act providing that custodial deposits of an eligible institution are not treated as funds obtained through a deposit broker, so far as they do not exceed 20 percent of the institution's total liabilities.

What the document actually says

“Custodial deposits of an eligible institution shall not be considered to be funds obtained, directly or indirectly, by or through a deposit broker to the extent that the total amount of such custodial deposits does not exceed an amount equal to 20 percent of the total liabilities of the eligible institution.”

To increase the supply of housing in America, and for other purposes, Sec. 901
That sentence, in plain words

Some deposits a bank holds for others do not count as brokered. The share that escapes is up to 20 percent. That share is measured against all the bank owes.

What this is about

A brokered deposit comes to a bank through a middleman. Rules limit how far a bank may lean on them. This carves out a slice that is not counted.

No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.

Custodial deposit and eligible institution are defined

The document says “means”Who acts: CongressHow: statuteSec. 901 in the PDF
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.”

To increase the supply of housing in America, and for other purposes, Sec. 901

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.”

To increase the supply of housing in America, and for other purposes, Sec. 901
That sentence, in plain words

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.

What this is about

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.

No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.

A bank not well capitalized may not pay a high rate on these deposits

The document says “may not”Who acts: covered insured depository institutionsHow: statuteSec. 901 in the PDF
What the document says

“A covered insured depository institution may not pay a rate of interest on custodial deposits that are accepted while not well capitalized that, at the time the funds or custodial deposits are accepted, significantly exceeds the limit set forth in paragraph (3).”

To increase the supply of housing in America, and for other purposes, Sec. 901

The section adds a new subsection (k) to section 29 of the Federal Deposit Insurance Act barring a bank that takes custodial deposits while not well capitalized from paying a rate of interest on them that significantly exceeds the local rate on deposits of similar maturity, or the national rate set by the Corporation for deposits taken outside its normal market area.

What the document actually says

“A covered insured depository institution may not pay a rate of interest on custodial deposits that are accepted while not well capitalized that, at the time the funds or custodial deposits are accepted, significantly exceeds the limit set forth in paragraph (3).”

To increase the supply of housing in America, and for other purposes, Sec. 901
That sentence, in plain words

A bank in weak shape may not pay too much for these deposits. The test is applied when the money comes in. The law sets what too much means.

What this is about

A weak bank can chase deposits by paying more. That can dig the hole deeper. The cap is the rate paid nearby, or a national rate.

No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.

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What This Page Covers, and What It Leaves Out

The three things the section does: the exception for custodial deposits up to 20 percent of total liabilities, the definitions of a custodial deposit and an eligible institution, and the interest rate limit for a covered institution that is not well capitalized.

The shorter definitions drawn from the Employee Retirement Income Security Act of 1974 are noted but not quoted.

The section works by amending section 29 of the Federal Deposit Insurance Act, which is not indexed here, so nothing is recorded about the rest of the rules on funds obtained through a deposit broker.