From Legislation to Implementation: What the FDIC’s Reciprocal Deposit Rule Means for Banks

The FDIC’s interim final rule on reciprocal deposits is the next step in turning the 21st Century ROAD to Housing Act into practical guidance for banks.

Effective September 1, 2026, the rule conforms the FDIC’s brokered deposit regulations to Section 902 of the law, which took effect on July 11, 2026, and provides additional context intended to simplify compliance.  It reflects the law’s replacement of the previous general cap, which was the lesser of $5 billion or 20% of an institution’s total liabilities, with a tiered calculation that can provide up to $30 billion in non-brokered reciprocal deposit capacity.

Under the new calculation, the general cap equals:

For example, an agent institution with $25 billion in total liabilities would have a general cap of $8.6 billion, which is significantly more than the $5 billion maximum available under the previous framework. Reciprocal deposits above an institution’s cap continue to be treated as brokered.

The law also broadens eligibility by allowing a well-capitalized institution with a CAMELS composite rating of 1, 2, or 3 to qualify as an “agent institution.” Previously, outside of limited waiver and special-cap provisions, this qualification applied only to institutions with a rating of 1 or 2. 

Greater clarity, not just greater capacity

While the expanded cap has received much of the attention, the rule’s operational clarifications are also meaningful. The FDIC provides additional guidance on when non-maturity reciprocal deposits are considered “received,” when an institution requalifies as an agent institution following a ratings or capital change, and how the special-cap provisions apply.

Together, these changes provide banks with greater certainty as they evaluate reciprocal deposits within their funding, liquidity, and customer-retention strategies.

The American Bankers Association (ABA) supported the rule, noting that reciprocal deposits provide stable, diversified funding and help banks retain customer relationships by offering access to expanded deposit insurance coverage through a single banking relationship. By helping deposits remain within local financial institutions, reciprocal deposit programs can also support lending to households and businesses in local communities those institutions serve.

The comment period for the interim rule closed October 1, and the FDIC could still revise the rule before finalizing it. In its September 29 comment letter, R&T supported adopting the rule as final, recommended additional calculation examples for each tier, and asked the FDIC to support a technical correction to the statute so that the special-cap lookback aligns with the expanded agent institution definition the ABA also has encouraged a broader reassessment of Section 29 of the Federal Deposit Insurance Act.

The FFIEC’s supplemental instructions for the September 30, 2026 Call Report updated the reporting instructions for reciprocal deposits to reflect the law and the FDIC’s rule. No new line items were added, and brokered reciprocal deposits reported on Schedule RC-O will no longer be published for individual institutions.

For banks, reciprocal deposit modernization is an opportunity to reassess how reciprocal deposits can help strengthen funding flexibility, deepen customer relationships, and support continued growth.