119-HR-5317 Journalist Public Summary

Public Summary — H.R. 5317 (119th): Community Bank Deposit Access Act of 2025

Headline Summary: Lets small, well‑capitalized community banks treat certain custodial deposits as regular (not “brokered”) deposits—capped at 20% of total liabilities—intended to make local funding easier while adding rate‑cap guardrails if a bank’s capital weakens.

What It Does: The bill creates a limited exception in the Federal Deposit Insurance Act so that qualifying “custodial deposits” (for example, funds placed by a bank, affiliated trust, or plan administrator in a fiduciary capacity to provide deposit insurance for clients) aren’t treated as brokered deposits, up to 20% of a bank’s total liabilities. It applies to insured depository institutions under $10 billion in assets that are well capitalized and have a solid supervisory rating (or a waiver). If a bank later isn’t well capitalized, it may not pay above‑market interest on custodial deposits accepted while in that condition, using local‑market or FDIC national rate benchmarks.

Why It Matters: Being labeled “brokered” can limit or raise the cost of deposits. Supporters say the change would help community banks compete for business, municipal, and retirement‑plan cash without tripping brokered‑deposit rules, potentially improving local credit availability. Critics worry that broadening exceptions could invite more volatile, rate‑sensitive funding and weaken guardrails meant to discourage risky balance‑sheet growth.

Who’s For It:

• The bill’s sponsor, Rep. French Hill (R‑AR), and members who favor easing funding frictions for community banks.
• Community banks and industry groups that argue custodial and sweep‑type deposits used for clients and public entities should not be penalized like traditional brokered funds.
• Lawmakers who view the 20% cap and interest‑rate limits as reasonable guardrails for well‑run small banks.

Who’s Against It:

• Some consumer‑protection and financial‑stability advocates who see brokered‑deposit limits as a core safety measure and worry this exception could expand “hot‑money” funding.
• Skeptics who prefer the FDIC’s existing brokered‑deposit framework and fear regulatory arbitrage or complexity from carve‑outs.

What’s Next: On May 19, 2026, the House debated H.R. 5317 under suspension of the rules; further proceedings on the motion were postponed. As of May 21, 2026, the House could reschedule a vote. If it passes the House, the bill would go to the Senate; if not acted upon by the end of the 119th Congress, it would expire.