Community Bank Deposit Access Act of 2025
Summary
The Community Bank Deposit Access Act of 2025 amends the Federal Deposit Insurance Act. It aims to ensure that certain custodial deposits of well-capitalized insured depository institutions are not considered funds obtained through deposit brokers. This provides a limited exception for custodial deposits, up to 20% of an eligible institution's total liabilities.
Expected Effects
The act will allow community banks to access custodial deposits more easily. It restricts interest rates paid on funds obtained through deposit brokers or custodial deposits accepted while not well capitalized. This could impact the competitiveness of smaller banks and the returns on certain types of deposits.
Potential Benefits
- Increased access to deposits for community banks.
- Reduced regulatory burden for well-capitalized institutions.
- Potentially lower borrowing costs for local businesses due to increased bank liquidity.
- May foster greater competition among smaller banks.
- Could lead to more investment in local communities served by these banks.
Potential Disadvantages
- Larger banks may have a competitive advantage due to their ability to attract deposits through other means.
- Restriction on interest rates could reduce returns for depositors.
- Potential for increased risk-taking by banks seeking to maximize deposit growth.
- The 20% limit on custodial deposits might not be sufficient for some institutions.
- Could create a loophole for institutions to circumvent deposit broker regulations.
Constitutional Alignment
The act appears to align with Congress's power to regulate commerce and banking under Article I, Section 8 of the Constitution. It aims to ensure the stability of the banking system and protect depositors, which falls under the general welfare clause. The act does not appear to infringe on any specific constitutional rights or limitations.
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).