Every so often, a piece of legislation cuts through the noise because it’s practical, bipartisan, and deeply aligned with how community and regional banks actually operate.
That’s what makes the House’s recent passage of H.R. 6644, the Housing for the 21st Century Act, by a decisive 390–9 vote, worth paying attention to. Embedded in this broader housing package are provisions originally advanced through H.R. 3234 (Keeping Deposits Local Act), HR 5317 (Community Bank Deposit Access Act of 2025), and HR 6955 (Main Street Capital Access Act). For banks, the implications are meaningful.
At its core, this legislation recognizes a simple truth: local deposits fuel local lending, and regulatory frameworks should reflect that reality.
A Smarter Approach to Reciprocal Deposits
Sections 601 and 602 of H.R. 6644 address custodial deposits and reciprocal deposits. Section 601 allows well-capitalized community banks under $10 billion in assets to treat certain fiduciary or custodial deposits as non-brokered funding, up to 20 percent of total liabilities, subject to existing safety and soundness guardrails.
Section 602 expands the circumstances under which reciprocal deposits may be excluded from brokered deposit treatment.
Under current law, a bank can exclude reciprocal deposits from brokered deposit treatment only up to the lesser of 20% of total liabilities or $5 billion. That cap applies uniformly, regardless of bank size.
The Housing for the 21st Century Act replaces that single cap with a tiered approach tied to institution size. Under this proposed framework, banks can exclude reciprocal deposits from brokered treatment based on portions of their balance sheet:
- up to 50% of the first $1 billion in liabilities
- up to 40% of liabilities between $1 billion and $10 billion
- up to 30% of liabilities between $10 billion and $250 billion
The tiering works like a progressive scale. A bank with $12 billion in liabilities would apply the exclusion to:
- 50% of its first $1 billion
- 40% of its next $9 billion
- 30% of the remaining $2 billion
Those amounts are added together to determine the total reciprocal deposits excluded from brokered treatment.
In practical terms, this change expands flexibility for community and regional banks, aligns treatment more closely with balance sheet scale, and allows more reciprocal deposits to qualify as nonbrokered while preserving prudential limits as institutions grow.
This approach builds on bipartisan reforms enacted in 2018 and reflects a growing recognition that reciprocal deposits, when used appropriately, improve deposit stability, support local relationship banking and add resiliency to the banking system.
Not Just a Technical Fix
If enacted, these changes would allow more reciprocal deposits to be treated as non-brokered, which could materially impact how banks manage liquidity and customer relationships. More importantly, it would help institutions:
- Ensure large customer deposits have access to expanded FDIC insurance
- Strengthen long-term, relationship-based banking
- Expand lending capacity in their communities
- And, critically, keep deposits local rather than pushing them elsewhere
This development highlights a growing shift toward regulatory frameworks that more accurately reflect the way community and regional banks serve their markets.
Bipartisanship with Purpose
The Housing for the 21st Century Act advanced with rare unanimity in the House Financial Services Committee and gained momentum after being addedtoChairman French Hill’s and Ranking Member Maxine Waters’ housing package.
That momentum was driven by a bipartisan group of lawmakers, including original co-sponsors Rep. Tom Emmer (R-MN) and Rep. Joyce Beatty (D-OH), along with strong support from banking trade associations at both the national and state levels.
The message was consistent: this is a practical fix that supports financial stability, customer protection, and community investment.
What Comes Next
With House passage complete, H.R. 6644 now moves to the Senate, where a bipartisan companion bill, S. 2757, is pending before the Senate Banking Committee.
The bill is not yet law, and institutions remain subject to existing regulations, safety and soundness standards, capital requirements, and supervisory expectations. While the statutory changes set important guardrails, their practical impact will ultimately be shaped by supervisory and regulatory implementation, including definitions and reporting expectations, rather than by the statute alone.
But the House vote sends a clear signal: policymakers understand the importance of equipping banks with tools that allow them to compete, grow, and serve their communities responsibly.
For those watching the intersection of policy, prudential regulation, and community banking, this is a development worth following closely.
At R&T Deposit Solutions, we view this House action as an important step toward modernizing deposit rules in a way that supports safety and soundness while helping community and regional banks compete and keep deposits local. We will continue to follow Senate consideration closely and serve as a technical resource as this process moves forward.