Minority Depository Institution and Community Bank Deposit Access Act of 2020

II 116TH CONGRESS 2D SESSION S. 4644 To amend the Federal Deposit Insurance Act to ensure that certain custodial deposits of well capitalized insured depository institutions are not consid- ered to be funds obtained by or through deposit brokers, and for other purposes. IN THE SENATE OF THE UNITED STATES SEPTEMBER 22, 2020 Mr. JONES introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To amend the Federal Deposit Insurance Act to ensure that certain custodial deposits of well capitalized insured de- pository institutions are not considered to be funds ob- tained by or through deposit brokers, and for other pur- poses. 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 ‘‘Minority Depository 4 Institution and Community Bank Deposit Access Act of 5 2020’’. 6 VerDate Sep 11 2014 19:34 Oct 05, 2020 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S4644.IS S4644 pamtmann on DSKBC07HB2PROD with BILLS 2 •S 4644 IS 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 an amount 11 equal to 20 percent of the total liabilities of the eligi- 12 ble institution. 13 ‘‘(2) DEFINITIONS.—In this subsection: 14 ‘‘(A) CUSTODIAL DEPOSIT.—The term 15 ‘custodial deposit’ means a deposit that would 16 otherwise be considered to be obtained, directly 17 or indirectly, by or through a deposit broker, if 18 the deposit is deposited at 1 or more insured 19 depository institutions, for the purpose of pro- 20 viding or maintaining deposit insurance for the 21 benefit of a third party, by or through any of 22 the following, each acting in a formal custodial 23 or fiduciary capacity for the benefit of a third 24 party: 25 VerDate Sep 11 2014 19:34 Oct 05, 2020 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S4644.IS S4644 pamtmann on DSKBC07HB2PROD with BILLS 3 •S 4644 IS ‘‘(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, as defined in section 3 of the Em- 11 ployee Retirement Income Security Act of 12 1974 (29 U.S.C. 1002). 13 ‘‘(B) ELIGIBLE INSTITUTION.—The term 14 ‘eligible institution’ means an insured deposi- 15 tory institution that accepts custodial deposits, 16 that were not deposited at the insured deposi- 17 tory institution in return for fees paid by the 18 insured depository institution pursuant to an 19 agreement with a third party, if the insured de- 20 pository institution— 21 ‘‘(i)(I) has less than $1,000,000,000 22 in total assets as reported on the consoli- 23 dated report of condition and income as re- 24 VerDate Sep 11 2014 19:34 Oct 05, 2020 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S4644.IS S4644 pamtmann on DSKBC07HB2PROD with BILLS 4 •S 4644 IS ported quarterly to the appropriate Federal 1 banking agency; or 2 ‘‘(II)(aa) is a community development 3 financial institution, as defined in section 4 103 of the Community Development Bank- 5 ing and Financial Institutions Act of 1994 6 (12 U.S.C. 4702); or 7 ‘‘(bb) is a minority depository institu- 8 tion, as defined in section 308 of the Fi- 9 nancial Institutions Reform, Recovery, and 10 Enforcement Act of 1989 (12 U.S.C. 1463 11 note); 12 ‘‘(ii)(I) when most recently examined 13 under section 10(d) was found to have a 14 composite condition of outstanding or 15 good; and 16 ‘‘(II) is well capitalized; or 17 ‘‘(iii) has obtained a waiver pursuant 18 to subsection (c). 19 ‘‘(C) PLAN ADMINISTRATOR.—The term 20 ‘plan administrator’ has the meaning given the 21 term ‘administrator’ in section 3 of the Em- 22 ployee Retirement Income Security Act of 1974 23 (29 U.S.C. 1002). 24 VerDate Sep 11 2014 19:34 Oct 05, 2020 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S4644.IS S4644 pamtmann on DSKBC07HB2PROD with BILLS 5 •S 4644 IS ‘‘(D) WELL CAPITALIZED.—The term ‘well 1 capitalized’ has the meaning given the term in 2 section 38(b).’’. 3 (b) INTEREST RATE RESTRICTION.—Section 29 of 4 the Federal Deposit Insurance Act (12 U.S.C. 1831f) is 5 amended by striking subsection (e) and inserting the fol- 6 lowing: 7 ‘‘(e) RESTRICTION ON INTEREST RATE PAID.— 8 ‘‘(1) DEFINITIONS.—In this subsection— 9 ‘‘(A) the terms ‘custodial deposit’, ‘eligible 10 institution’, and ‘well capitalized’ have the 11 meanings given those terms in subsection (j); 12 and 13 ‘‘(B) the term ‘covered insured depository 14 institution’ means an insured depository institu- 15 tion that— 16 ‘‘(i) under subsection (c) or (d), ac- 17 cepts funds obtained, directly or indirectly, 18 by or through a deposit broker, or 19 ‘‘(ii) while acting as an eligible insti- 20 tution under subsection (j), accepts custo- 21 dial deposits while not well capitalized. 22 ‘‘(2) PROHIBITION.—A covered insured deposi- 23 tory institution may not pay a rate of interest on 24 funds that, under subsection (c) or (d), are obtained, 25 VerDate Sep 11 2014 19:34 Oct 05, 2020 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S4644.IS S4644 pamtmann on DSKBC07HB2PROD with BILLS 6 •S 4644 IS directly or indirectly, by or through a deposit broker 1 or on custodial deposits that are accepted while not 2 well capitalized that, at the time the funds or custo- 3 dial deposits are accepted, significantly exceeds the 4 limit set forth in paragraph (3). 5 ‘‘(3) LIMIT ON INTEREST RATES.—The limit on 6 the rate of interest referred to in paragraph (2) shall 7 be not greater than— 8 ‘‘(A) the rate paid on deposits of similar 9 maturity in the normal market area of the cov- 10 ered insured depository institution for deposits 11 accepted in the normal market area of the cov- 12 ered insured depository institution; or 13 ‘‘(B) the national rate paid on deposits of 14 comparable maturity, as established by the Cor- 15 poration, for deposits accepted outside the nor- 16 mal market area of the covered insured deposi- 17 tory institution.’’. 18 SEC. 3. COMMUNITY DEVELOPMENT REVOLVING LOAN 19 FUND FOR CREDIT UNIONS. 20 Section 130 of the Federal Credit Union Act (12 21 U.S.C. 1772c–1) is amended by striking subsection (c) 22 and inserting the following: 23 ‘‘(c) LOANS.— 24 VerDate Sep 11 2014 19:34 Oct 05, 2020 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S4644.IS S4644 pamtmann on DSKBC07HB2PROD with BILLS 7 •S 4644 IS ‘‘(1) IN GENERAL.—The Board may require 1 that any loans made from the Fund be matched by 2 increased shares in the borrower credit union. 3 ‘‘(2) ELIGIBILITY.—Only low-income credit 4 unions and minority depository institutions that are 5 federally insured credit unions are eligible for loans 6 made from the Fund.’’. 7 Æ VerDate Sep 11 2014 19:34 Oct 05, 2020 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6301 E:\BILLS\S4644.IS S4644 pamtmann on DSKBC07HB2PROD with BILLS