H.R. 3234 explained · 119th Congress · Pending in Congress
Keeping Deposits Local Act
Cosponsors: 11 (3 D, 8 R) · per Congress.gov, 2026-10-08
Introduced: 2025-05-07
Latest action (2026-05-21): Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
What H.R. 3234 does, in plain terms
This bill increases the amount insured depository institutions may accept as reciprocal deposits. (Reciprocal deposits are used by institutions to increase the availability of deposit insurance by splitting large deposits using a reciprocal network of institutions.) The bill creates a tiered system so that the allowable amount is based on the institution's total liabilities. Additionally, the bill changes certain qualifications insured depository institutions may be required to have to accept reciprocal deposits. Under current law, institutions may qualify by having a composite rating of outstanding or good, among other requirements. The bill allows institutions with a 1, 2, or 3 rating under the CAMELS scale to qualify. (The Uniform Financial Institutions Rating System uses the characteristics of capital adequacy, asset quality, management, earnings, liquidity, and sensitivity to market risk (i.e., CAMELS ratings) to rate the health of financial institutions, with a 1 indicating the highest rating and least degree of supervisory concern and a 5 indicating the lowest rating and highest degree of supervisory concern.)
Official summary by the Congressional Research Service, via Congress.gov.
Constitution Index
“VFA Constitution grade”
Constitutionally sound
Graded 2026-10-08
SI-generated grade · five published checks · not individually reviewed by a person · methodology
HR 3234 is a technical amendment to existing federal deposit-insurance law, authorized by the Commerce and Necessary and Proper Clauses, that expands rather than restricts liberty and creates no rights, due process, or federalism violation.
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✓ Passes · Enumerated powers
Congress has explicit authority over interstate banking and deposit insurance under Article I, Section 8, Clause 3 (Commerce Clause) and Article I, Section 8, Clause 18 (Necessary and Proper Clause) to effectuate its powers over commerce and coining and regulating currency-related financial stability. Adjusting FDIC reciprocal-deposit caps is within that long-established commerce and banking autho… -
✓ Passes · Bill of Rights
The bill does not restrict speech, religion, press, assembly, arms, searches, trial rights, or other protections in the First through Tenth Amendments. It adjusts technical FDIC reciprocal-deposit limits and CAMELS eligibility thresholds. No First Amendment, Second Amendment, or Fourth Amendment interest is implicated. -
✓ Passes · Individual sovereignty
The bill restricts no personal conduct, belief, speech, labor, or use of property. It expands options for depositors and community banks to obtain insurance coverage through reciprocal networks. Any incidental regulation falls on insured institutions that voluntarily participate, with a legitimate justification in financial stability, and leaves individual choice intact under the Ninth and Tenth A… -
✓ Passes · Decentralization
Deposit insurance for the interstate banking system cannot be provided by individuals, families, local counties, or single states without fragmenting coverage and creating runs. The existing federal FDIC system is the minimum effective level. This bill does not create new federal power or a new agency; it modestly liberalizes limits within that existing system, so it does not consolidate decision-… -
✓ Passes · Due process and takings
No deprivation of life, liberty, or property under the Fifth Amendment Due Process Clause and no taking under the Fifth Amendment Takings Clause. The bill confers a benefit - expanded eligibility to accept reciprocal deposits - through prospective, generally applicable statutory criteria with legislative notice, not adjudication, seizure, or uncompensated appropriation.
Sources: Congress.gov: HR 3234 summary
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