American Banker wrote a piece entitled, "Reform law has an overlooked benefit for funding-hungry banks," which says, "A section of the law rolling back key Dodd-Frank Act provisions could help small banks in need of funding. Embedded in the nearly 200-page document is a change to how banks report reciprocal deposits, or those that a bank, with certain conditions, can hold with help from a placement network. Under terms of the law, reciprocal deposits at well-capitalized banks with a Camels rating of 1 or 2 can total the lesser of $5 billion or 20% of total liabilities. That's welcome news for institutions such as FVCbank in Fairfax, Va.... The change could provide an even bigger lift to banks that have used the product sparingly because regulators had required them to report reciprocal deposits, which exist to guarantee deposits over the Federal Deposit Insurance Corp.'s $250,000 insurance limit, as brokered deposits. Regulators view brokered deposits with more skepticism than core deposits; banks that rely on those deposits pay higher deposit insurance premiums." The change is also welcome news for FDIC "amalgamators" like Promontory Interfinancial, Total Bank Solutions, StoneCastle Cash Management and Reich & Tang, who provide networks of banks to brokerages and financial institutions so that they can get around the FDIC's limit of $250,000 on deposit insurance.

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