The Federal Deposit Insurance Corporation adopted a rule on August 27, 2026 that lets a bank move far more money through reciprocal deposit networks, arrangements that let one large balance carry full federal deposit insurance even though it runs well past the standard $250,000 coverage limit that applies to any single account at any single bank. The new formula raises the ceiling on how much a bank can place this way to as much as $30 billion, up from a flat cap that topped out at $5 billion under the old rule. For a household or small business sitting on a balance bigger than $250,000, proceeds from a home sale, an inheritance, a year-end payroll account, a municipality’s tax receipts, the change affects how much room a bank has to keep that entire balance insured without the depositor opening accounts at a dozen different institutions or tracking multiple statements and interest rates.
The rule took effect September 1, 2026 as an interim final rule, which means it is already governing bank behavior even while the FDIC collects public comment through October 1. It does not touch the $250,000 insurance ceiling that applies to any one depositor at any one bank. What it changes is how much of a bank’s incoming reciprocal deposits regulators let that bank treat as ordinary deposits rather than as higher-scrutiny brokered funding.
The FDIC’s New $30 Billion Reciprocal-Deposit Cap
The FDIC Board of Directors approved the interim final rule to implement section 902 of the 21st Century ROAD to Housing Act, a provision that changed the brokered-deposit framework in the Federal Deposit Insurance Act when it took effect on July 11, 2026. The rule, detailed in a financial institution letter, replaces the agency’s old flat dollar cap with a tiered calculation tied to a bank’s total liabilities: 50 percent of the portion of total liabilities up to $1 billion, 40 percent of the portion between $1 billion and $10 billion, and 30 percent of any portion above $10 billion. Run that formula out for the largest qualifying banks and it caps out at $30 billion, the ceiling named in the new rule. A smaller community bank with a few hundred million dollars in total liabilities sees a much smaller allowance under the same formula, since the tiers scale with the size of its own balance sheet.
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How a Balance Above $250,000 Gets Fully Insured
The insurance mechanism behind a reciprocal deposit network is straightforward once it is broken down. A bank that takes in a deposit larger than the standard $250,000 coverage amount can, through a deposit placement network, send pieces of that money out to other banks in the network, with each piece sized at or under $250,000. Because each piece legally becomes a deposit at a different FDIC-insured bank, each one qualifies separately for its own $250,000 of coverage. The depositor never has to open a new account anywhere; the arrangement runs through the original bank, and that bank keeps a matching amount of deposits coming in from other network banks, which is why regulators call the swap reciprocal. The rule’s Federal Register notice defines a reciprocal deposit as one received by an agent institution through a deposit placement network with the same maturity, if any, and in the same aggregate amount as covered deposits the agent institution places in other network member banks. From the depositor’s chair, the paperwork, the statement and the point of contact all stay with the original bank; only the underlying placement of the money is split up behind the scenes.
What Counted as Brokered Money Before This Rule
Before the ROAD to Housing Act change, the FDIC’s general cap on reciprocal deposits a bank could exclude from the brokered-deposit category was the lesser of $5 billion or 20 percent of that bank’s total liabilities. Brokered deposits carry a stricter regulatory label because they behave differently than a bank’s core local deposits; they tend to move toward whichever bank offers the best rate, and a bank that leans heavily on them can face closer supervisory scrutiny and, if its capital position weakens, limits on gathering more of them. Section 902 raised that ceiling considerably, and the interim final rule spells out exactly how a bank calculates its new, larger allowance.
Which Banks Can Use the Larger Allowance
The expanded cap is not open to every bank. To qualify as an agent institution able to place reciprocal deposits under the exception, a bank must have been assigned a CAMELS composite rating of 1, 2, or 3 at its most recent exam and be well capitalized. The interim final rule widened that eligibility from the earlier standard of a rating of 1 or 2, letting more well-capitalized, adequately rated banks use the reciprocal deposit exception. A bank that later gets downgraded or falls out of the well-capitalized category can lose access to the exception, and the rule also lays out how a bank requalifies once its rating or capital position improves again, tying the larger allowance to ongoing supervisory health rather than a one-time approval.
How Much Money Already Moves Through Reciprocal Networks
Reciprocal deposits are already a sizable piece of the banking system. As of March 31, 2026, 2,089 FDIC-insured institutions reported holding reciprocal deposits totaling $462.8 billion, out of 4,278 FDIC-insured institutions nationwide. Within that group, 331 institutions reported $91.9 billion in reciprocal deposits large enough to still be classified as brokered under the prior framework, deposits the new, higher cap is designed to pull back into the ordinary, less-scrutinized category. The FDIC estimated the change could reduce its aggregate deposit insurance assessment revenue by roughly $45.8 million a year, a reflection of how much reciprocal-deposit volume shifts out of the higher-scrutiny brokered bucket under the new formula.
This article was produced with AI assistance and reviewed by a human editor. Figures are linked to their primary sources; where a claim could not be verified from the public record, we say so.
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