Community Bank Deposit Access Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 4384 To amend the Federal Deposit Insurance Act to ensure that certain custodial deposits of a well capitalized insured depository institution are not consid- ered to be funds obtained by or through a deposit broker, and for other purposes. IN THE HOUSE OF REPRESENTATIVES SEPTEMBER 18, 2019 Mr. CRIST (for himself and Mr. HILL of Arkansas) introduced the following bill; which was referred to the Committee on Financial Services A BILL To amend the Federal Deposit Insurance Act to ensure that certain custodial deposits of a well capitalized insured depository institution are not considered to be funds obtained by or through a deposit broker, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Community Bank De- 4 posit Access Act of 2019’’. 5 VerDate Sep 11 2014 21:44 Sep 20, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H4384.IH H4384 kjohnson on DSK79L0C42 with BILLS 2 •HR 4384 IH SEC. 2. LIMITED EXCEPTION FOR CUSTODIAL DEPOSITS. 1 (a) IN GENERAL.—Section 29 of the Federal Deposit 2 Insurance Act (12 U.S.C. 1831f) is amended by adding 3 at the end the following: 4 ‘‘(j) LIMITED EXCEPTION FOR CUSTODIAL DEPOS- 5 ITS.— 6 ‘‘(1) IN GENERAL.—Custodial deposits of an el- 7 igible institution shall not be considered to be funds 8 obtained, directly or indirectly, by or through a de- 9 posit broker to the extent that the total amount of 10 such custodial deposits does not exceed the lesser 11 of— 12 ‘‘(A) $5,000,000,000; or 13 ‘‘(B) an amount equal to 10 percent of the 14 total liabilities of the eligible institution. 15 ‘‘(2) DEFINITIONS.—In this subsection: 16 ‘‘(A) CUSTODIAL DEPOSIT.—The term 17 ‘custodial deposit’ means a deposit that would 18 otherwise be considered to be obtained, directly 19 or indirectly, by or through a deposit broker, if 20 it is deposited at 1 or more insured depository 21 institutions, for the purpose of providing or 22 maintaining deposit insurance for the benefit of 23 a third party, by or through any of the fol- 24 lowing, each acting in a formal custodial or fi- 25 duciary capacity for the benefit of a third party: 26 VerDate Sep 11 2014 20:11 Sep 24, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H4384.IH H4384 kjohnson on DSK79L0C42 with BILLS 3 •HR 4384 IH ‘‘(i) An insured depository institution 1 serving as agent, trustee, or custodian. 2 ‘‘(ii) A trust entity controlled by an 3 insured depository institution serving as 4 agent, trustee, or custodian. 5 ‘‘(iii) A State-chartered trust company 6 serving as agent, trustee, or custodian. 7 ‘‘(iv) A plan administrator or invest- 8 ment advisor, acting in a formal custodial 9 or fiduciary capacity for the benefit of a 10 plan defined in section 3(3) of the Em- 11 ployee Retirement Income Security Act of 12 1974 (29 U.S.C. 1002(3)). 13 ‘‘(B) ELIGIBLE INSTITUTION.—The term 14 ‘eligible institution’ means an insured deposi- 15 tory institution that accepts custodial deposits, 16 that were not placed there in return for fees 17 paid by the insured depository institution pur- 18 suant to an agreement with a third party, if the 19 insured depository institution— 20 ‘‘(i)(I) when most recently examined 21 under section 10(d) was found to have a 22 composite condition of outstanding or 23 good; and 24 ‘‘(II) is well capitalized; or 25 VerDate Sep 11 2014 21:44 Sep 20, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H4384.IH H4384 kjohnson on DSK79L0C42 with BILLS 4 •HR 4384 IH ‘‘(ii) has obtained a waiver pursuant 1 to subsection (c). 2 ‘‘(C) PLAN ADMINISTRATOR.—The term 3 ‘plan administrator’ has the meaning given the 4 term ‘administrator’ in section 3(16) of the 5 Employee Retirement Income Security Act of 6 1974 (29 U.S.C. 1002(16)). 7 ‘‘(D) WELL CAPITALIZED.—The term ‘well 8 capitalized’ has the meaning given the term in 9 section 38(b)(1)(A).’’. 10 (b) INTEREST RATE RESTRICTION.—Section 29 of 11 the Federal Deposit Insurance Act (12 U.S.C. 1831f) is 12 amended by striking subsection (e) and inserting the fol- 13 lowing: 14 ‘‘(e) RESTRICTION ON INTEREST RATE PAID.— 15 ‘‘(1) DEFINITIONS.—In this subsection— 16 ‘‘(A) the terms ‘custodial deposit’, ‘eligible 17 institution’, and ‘well capitalized’ have the 18 meanings given those terms, respectively, in 19 subsection (j); and 20 ‘‘(B) the term ‘covered insured depository 21 institution’ means an insured depository institu- 22 tion that— 23 VerDate Sep 11 2014 21:44 Sep 20, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H4384.IH H4384 kjohnson on DSK79L0C42 with BILLS 5 •HR 4384 IH ‘‘(i) under subsection (c) or (d), ac- 1 cepts funds obtained, directly or indirectly, 2 by or through a deposit broker, or 3 ‘‘(ii) while acting as an eligible insti- 4 tution under subsection (j), accepts custo- 5 dial deposits while not well capitalized. 6 ‘‘(2) PROHIBITION.—A covered insured deposi- 7 tory institution may not pay a rate of interest on 8 funds that, under subsection (c) or (d), are obtained, 9 directly or indirectly, by or through a deposit broker 10 or on custodial deposits that are accepted while not 11 well capitalized that, at the time the funds or custo- 12 dial deposits are accepted, significantly exceeds the 13 limit set forth in paragraph (3). 14 ‘‘(3) LIMIT ON INTEREST RATES.—The limit on 15 the rate of interest referred to in paragraph (2) shall 16 be— 17 ‘‘(A) the rate paid on deposits of similar 18 maturity in the normal market area of the cov- 19 ered insured depository institution for deposits 20 accepted in the normal market area of the cov- 21 ered insured depository institution; or 22 ‘‘(B) the national rate paid on deposits of 23 comparable maturity, as established by the Cor- 24 poration, for deposits accepted outside the nor- 25 VerDate Sep 11 2014 21:44 Sep 20, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4384.IH H4384 kjohnson on DSK79L0C42 with BILLS 6 •HR 4384 IH mal market area of the covered insured deposi- 1 tory institution.’’. 2 Æ VerDate Sep 11 2014 21:44 Sep 20, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\H4384.IH H4384 kjohnson on DSK79L0C42 with BILLS