Keeping Deposits Local Act
Summary
The "Keeping Deposits Local Act" aims to amend the Federal Deposit Insurance Act, modifying the treatment of reciprocal deposits. Specifically, it adjusts the amount of reciprocal deposits that are not considered funds obtained through a deposit broker. The bill also mandates a study on reciprocal deposits by the FDIC in consultation with the Federal Reserve.
Expected Effects
The act will change how reciprocal deposits are classified, potentially impacting the liquidity and operational strategies of insured depository institutions. The required study will provide further insight into the performance and risks associated with reciprocal deposits. This could lead to future regulatory adjustments based on the study's findings.
Potential Benefits
- Increased flexibility for insured depository institutions in managing reciprocal deposits.
- Potential for enhanced community banking by keeping deposits local.
- Greater understanding of reciprocal deposits through the mandated study.
- Clarification of the definition of 'agent institution' under the Federal Deposit Insurance Act.
- May lead to more efficient allocation of capital within the banking system.
Potential Disadvantages
- Potential increased risk if reciprocal deposits are not adequately monitored.
- Possible complexity in implementing the new calculation methods for reciprocal deposits.
- The study may reveal unforeseen negative consequences of reciprocal deposit arrangements.
- Could disproportionately benefit larger institutions over smaller ones.
- May create opportunities for regulatory arbitrage.
Constitutional Alignment
The bill appears to align with the Commerce Clause (Article I, Section 8) by regulating banking activities that affect interstate commerce. It does not appear to infringe upon any individual liberties or rights protected by the Constitution or its amendments. The act's focus on financial regulation falls within the purview of Congress's enumerated powers.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).