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Increase the supply of housing in America › Section 902

Keeping Deposits Local

Section 902 · Sec. 902 ·

What this chapter is about

This part changes how a swapped deposit is counted for a bank. Banks trade deposits with each other so savers stay insured. The share that escapes the broker label now falls in three steps. A study of how these deposits behave is due in six months.

3 proposals indexed from this chapter.

The share of reciprocal deposits that escapes the broker label falls in three steps

The document says “shall not”Who acts: Federal Deposit Insurance CorporationHow: statuteSec. 902 in the PDF
What the document says

“``(A) An amount equal to 50 percent of the portion of the total liabilities of the agent institution that is less than or equal to $1,000,000,000. ``(B) An amount equal to 40 percent of the portion, if any, of the total liabilities of the agent institution that is greater than $1,000,000,000, but less than or equal to $10,000,000,000.”

To increase the supply of housing in America, and for other purposes, Sec. 902

The section replaces paragraph (1) of section 29(i) of the Federal Deposit Insurance Act with a three-tier formula. Reciprocal deposits are not treated as funds obtained through a deposit broker up to 50 percent of liabilities at or below $1,000,000,000, 40 percent of liabilities above that and up to $10,000,000,000, and 30 percent of liabilities above that and up to $96,333,333,333.

What the document actually says

“``(A) An amount equal to 50 percent of the portion of the total liabilities of the agent institution that is less than or equal to $1,000,000,000. ``(B) An amount equal to 40 percent of the portion, if any, of the total liabilities of the agent institution that is greater than $1,000,000,000, but less than or equal to $10,000,000,000.”

To increase the supply of housing in America, and for other purposes, Sec. 902
That sentence, in plain words

Half of the first billion dollars a bank owes may be covered. Above that the share drops to 40 percent. That band runs up to ten billion dollars.

What this is about

A swapped deposit is one bank trading deposits with another. It keeps a large saver fully insured. The bigger the bank, the smaller the share that escapes.

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.

The agent institution test becomes a CAMELS rating of 1, 2, or 3

The document says “is amended”Who acts: CongressHow: statuteSec. 902 in the PDF
What the document says

“is amended by striking ``was found to have a composite condition of outstanding or good'' and inserting ``was assigned a CAMELS rating of 1, 2, or 3 under the Uniform Financial Institutions Rating System (or an equivalent rating under a comparable rating system)''.”

To increase the supply of housing in America, and for other purposes, Sec. 902

The section amends the definition of an agent institution in section 29(i)(2)(A)(i)(I) of the Federal Deposit Insurance Act, replacing a test of being found in outstanding or good condition with a CAMELS rating of 1, 2, or 3 under the Uniform Financial Institutions Rating System or an equivalent.

What the document actually says

“is amended by striking ``was found to have a composite condition of outstanding or good'' and inserting ``was assigned a CAMELS rating of 1, 2, or 3 under the Uniform Financial Institutions Rating System (or an equivalent rating under a comparable rating system)''.”

To increase the supply of housing in America, and for other purposes, Sec. 902
That sentence, in plain words

Words about a bank being in outstanding or good shape come out. New words go in. They name a rating of 1, 2, or 3 on a standard scale.

What this is about

Bank examiners give each bank a score. The scale runs from 1 to 5, with 1 the best. The new test names the numbers rather than words.

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 study of reciprocal deposits is due in six months

The document says “shall”Who acts: Federal Deposit Insurance Corporation, Board of Governors of the Federal Reserve SystemHow: statuteSec. 902 in the PDF
What the document says

“The Federal Deposit Insurance Corporation, in consultation with the Board of Governors of the Federal Reserve System, shall carry out a study on reciprocal deposits.”

To increase the supply of housing in America, and for other purposes, Sec. 902

The section requires the Federal Deposit Insurance Corporation, consulting the Board of Governors of the Federal Reserve System, to study reciprocal deposits, covering how they have performed since 2018 with numbers and interviews, use broken out by bank size, use during periods of stress, and the depositors driving demand, how they compare with other deposit arrangements, and their benefits and risks. A report with all findings is due to the House Committee on Financial Services and the Senate Committee on Banking, Housing, and Urban Affairs within six months of enactment.

What the document actually says

“The Federal Deposit Insurance Corporation, in consultation with the Board of Governors of the Federal Reserve System, shall carry out a study on reciprocal deposits.”

To increase the supply of housing in America, and for other purposes, Sec. 902
That sentence, in plain words

A federal insurer must study these swapped deposits. It must ask the central bank for input.

What this is about

The study looks at how the deposits have behaved since 2018. It looks hardest at times of stress. A report is due to Congress within six months.

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 new three-tier formula for reciprocal deposits, the change to the definition of an agent institution, and the study and report on reciprocal deposits.

Nothing the section does is left out.

The section works by amending section 29(i) of the Federal Deposit Insurance Act, which is not indexed here, so nothing is recorded about the rest of the reciprocal deposit rules.