Congress quietly raises limits on brokered deposits for mid-sized banks
S. 2757 — Keeping Deposits Local Act · Filed by Mike Rounds (R-SD) · 4 cosponsors · Introduced Sep 10, 2025 · Referred to committee
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What it does
This bill increases the amount of reciprocal deposits (deposits placed through brokers at other banks) that small and mid-sized banks can hold without triggering deposit-broker restrictions. It raises the threshold from a flat cap to a tiered system based on bank size, allowing smaller banks to keep more brokered deposits on their books. The bill also updates the regulatory standard used to qualify for this treatment, replacing an older rating system with the current CAMELS rating scale.
Why we flagged it
The bill's operative mechanism is a targeted regulatory exemption for a specific class of financial institutions (banks using reciprocal deposits). It reduces compliance burden and expands funding options for smaller and mid-sized banks by raising thresholds for brokered-deposit classification.
What the text implies
- Tiered thresholds create incentive for banks to grow liabilities to reach higher exemption tiers, potentially encouraging rapid balance-sheet expansion and risk-taking.
- Reduced brokered-deposit monitoring may obscure funding fragility at mid-sized banks, delaying early-warning signals to regulators and depositors.
The full analysis lists 4 implications of this text.
Who stands to gain
community banks; regional banks; mid-sized depository institutions