Keeping Deposits Local Act

This bill amends the Federal Deposit Insurance Act to modify how reciprocal deposits are treated for insured depository institutions, aiming to adjust the criteria under which these deposits are not classified as funds obtained through a deposit broker. It introduces a new tiered structure for calculating the amount of reciprocal deposits exempt from brokered deposit classification, based on an institution's total liabilities. Under this new system, smaller institutions with liabilities up to $1 billion can exclude 50 percent of their reciprocal deposits, with the percentage gradually decreasing for larger institutions across several tiers. For example, institutions with liabilities between $1 billion and $10 billion can exclude 40 percent of that portion, while those over $1 trillion can exclude 2 percent of that portion. Additionally, the legislation broadens the definition of an "agent institution" eligible for these provisions by expanding the required CAMELS rating from only 1 or 2 to now include institutions with a rating of 3 , thereby allowing more banks to participate in these arrangements.