What Does the New Reciprocal Deposit Legislation in the Housing Act Mean for U.S. Banks?

The recently enacted 21st Century ROAD to Housing Act marks a significant shift in how U.S. banks can use reciprocal deposits—an established but increasingly important tool for deposit growth and local lending. The new law amends the Federal Deposit Insurance Act to expand the amount of a bank’s reciprocal deposits that can be classified as “nonbrokered,” a designation that generally reflects more stable, relationship-based funding. By expanding the reciprocal deposit limit, the new law gives banks greater flexibility to strengthen their balance sheets and retain high-value customer relationships. In practical terms, a bank can now hold substantially larger volumes of reciprocal deposits as nonbrokered.  Guest article from Preferred Service Provider IntraFi.  

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