BGOV Bill Analysis: H.R. 3234, Reciprocal Deposits Limits

The amount of reciprocal deposits a bank could hold without additional regulatory scrutiny would be increased under H.R. 3234, which would replace existing caps with a tiered system based on the financial institution’s total liabilities.

Financial institutions use reciprocal deposits to split customers’ funds across a network of multiple banks or credit unions, which lets customers obtain federal deposit insurance on deposits greater than the single-bank maximum coverage limit of $250,000 for a single customer. The banks in the network provide reciprocal funds to the financial institution that originated the deposit, allowing it to maintain access to liquid assets. ...