By tailoring the rules, this legislation removes the outdated cap on reciprocal deposits for community banks. That flexibility will help South Dakota banks keep deposits local and strengthens the resilience of our financial system. Under the bill, reciprocal deposits would be eligible for non-brokered status based on tiered liability thresholds, and CAMELS 3-rated banks would be eligible for full use of non-brokered treatment as long as they are well-capitalized.
Support legislation to modernize reciprocal deposit rules by replacing the current cap with tiered thresholds for non-brokered treatment and allowing well-capitalized CAMELS 3-rated banks to fully use non-brokered treatment for reciprocal deposits.
Occurrences
Evidence
Congress.gov lists Sen. Mike Rounds [R-SD] as an original cosponsor of S.2155 on 11/16/2017.
The Senate vote page says S.2155 passed 67-31 on March 14, 2018, and lists Rounds (R-SD) as Yea.
Section 202 created a limited exception for reciprocal deposits, excluding them from brokered-deposit treatment only up to the lesser of $5,000,000,000 or 20 percent of total liabilities, and only for institutions meeting specified capital and examination conditions.
The U.S. Code provision for reciprocal deposits still says the exception applies only up to the lesser of $5,000,000,000 or 20 percent of total liabilities, and defines an agent institution by reference to an examination finding of outstanding or good plus well-capitalized status, waiver, or a grandfathering limit.
The eCFR page, displayed as up to date as of 6/26/2026, keeps the reciprocal-deposit exception at the lesser of $5,000,000,000 or 20 percent of total liabilities and requires a composite condition of outstanding or good plus well-capitalized status unless a waiver or grandfathering condition applies.
Congress.gov states S.2155 became Public Law No. 115-174 on 05/24/2018. The CRS summary says Section 202 excludes reciprocal deposits from brokered-deposit limitations if total reciprocal deposits do not exceed the lesser of $5 billion or 20% of total liabilities.
Assessments
Rounds materially supported reciprocal-deposit modernization during his federal Senate service by originally cosponsoring S.2155 and voting for final passage, and that bill became Public Law 115-174 on May 24, 2018. However, the enacted law created only a limited reciprocal-deposit exception capped at the lesser of $5 billion or 20 percent of liabilities and retained the outstanding/good examination-condition framework; it did not replace the cap with tiered thresholds or give well-capitalized CAMELS 3-rated banks full non-brokered treatment. Because a related modernization was enacted with Rounds's support but the specific promised policy was not delivered, this merits partial credit with an effort badge.