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.
What the law changes
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.
Under the previous framework, reciprocal deposits counted as nonbrokered were capped at the lesser of 20% of a bank’s total liabilities or $5 billion. This one-size-fits-all limit often constrained banks’ ability to fully leverage reciprocal deposits, even when those funds were tied to long-term customer relationships.
The 21st Century ROAD to Housing Act replaces that flat cap with a cumulative, tiered model based on the amount of a bank’s liabilities. Under the new formula, reciprocal deposits can be excluded from brokered deposit treatment up to:
- 50% of the first $1 billion in liabilities, plus
- 40% of liabilities between $1 billion and $10 billion, plus
- 30% of liabilities over $10 billion
- With a cap of up to $30 billion that can be counted as nonbrokered
For example, under the previous law, a bank with $1.5 billion in liabilities could count $300 million of reciprocal deposits as nonbrokered. The new law increases that number to $700 million.
For a bank with $18 billion in liabilities, the amount of reciprocal deposits considered nonbrokered increases from $3.6 billion under the previous law to $6.5 billion now.
Try this calculator for your bank’s specific numbers.
Why reciprocal deposits matter
Ever since IntraFi invented reciprocal deposits 25 years ago, reciprocal deposits have enabled banks to offer customers access to aggregate FDIC insurance on large balances—while maintaining a single banking relationship. When reciprocal deposits are placed across a network of participating banks in increments below the standard $250,000 insurance limit, the placing bank receives matching deposits back.
For customers, this structure provides enhanced safety without operational complexity. For banks, it helps attract more large, stable deposits from businesses, municipalities, nonprofits and high-net-worth individuals.
Reciprocal deposits are particularly valuable because, as nonbrokered deposits, they behave more like “core” funding—sticky and relationship-driven—rather than rate-sensitive brokered deposits. Policymakers and industry groups have increasingly recognized this distinction, especially after the bank failures of 2023 highlighted the risks associated with uninsured deposits.
Impact on banks and communities
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.
This has direct implications for local economies. Reciprocal deposits are widely understood to help keep funds within the communities where they originate, supporting lending to small businesses, homeowners, and local organizations.
Lawmakers have emphasized that the goal of the legislation is to keep deposits local and the new law spurs banks—particularly community and regional institutions—to grow local depositor relationships and deploy more capital within their markets rather than passing on large deposits and losing them to larger institutions or alternative cash management solutions.
A shift toward flexibility and resilience
The move to a tiered system reflects a broader regulatory shift toward aligning deposit rules with the realities of modern banking. The prior cap was set at the same limit for all banks regardless of size, while the new framework scales with institutions’ balance sheets.
As a result, banks can now use reciprocal deposits at a scale proportionate to their total liabilities, protecting more customers’ large cash balances, improving their competitiveness, and aiding liquidity management. The law also extends eligibility to a wider range of well-capitalized banks, further broadening access to this funding source.
The bottom line
The 21st Century ROAD to Housing Act is a considerable step forward in deposit regulation. By expanding the amount of reciprocal deposits that can be treated as nonbrokered, the law strengthens banks’ ability, in greater volume than before, to:
- Attract and retain large, safety-conscious depositors
- Enhance funding stability
- Support increased lending in local communities
At a time when deposit competition remains intense and customers are increasingly focused on safety, reciprocal deposit services have become a critical tool for banks. This legislation ensures they can use that tool more fully—unlocking greater flexibility, stronger relationships, and more capital directed toward local economic growth.
See more on this transformative law here.
About IntraFi
As the inventor and largest provider of reciprocal deposits, and with the highest per-depositor and per-bank capacity, IntraFi stands ready to help banks of all sizes use reciprocal deposits to strengthen their balance sheet and grow local, loyal customer relationships.
