Keeping Deposits Local Act

The "Keeping Deposits Local Act" amends the Federal Deposit Insurance Act to modify the regulatory treatment of reciprocal deposits , specifically revising the amount of these deposits that are not considered funds obtained through a deposit broker. This adjustment aims to provide insured depository institutions with greater flexibility in managing their deposit base by establishing a new tiered calculation system for this exemption, which is based on an institution's total liabilities. For example, 50% of reciprocal deposits are exempt for institutions with liabilities up to $1 billion, with this percentage gradually decreasing for larger institutions, down to 2% for those exceeding $1 trillion in liabilities. Additionally, the legislation clarifies the definition of an eligible "agent institution" by requiring it to have a CAMELS rating of 1, 2, or 3 , replacing a less specific financial condition requirement to ensure robust financial health among participating institutions.