House panel holds hearing on deposit insurance reform 

The House Financial Services Committee discussed a wide array of issues during a hearing on deposit insurance reform, including supporting community banks and improving the bank resolution framework. 

Details: In his opening remarks, Committee Chairman French Hill (R.-Ark.) said the panel’s “guiding principles should be to ensure the stability of the banking system, maintain depositor confidence, fairly apportion costs, enforce market discipline, and reduce moral hazard.” 

ICBA-Backed Legislation: The committee began discussion on several ICBA-supported bills: 

• The Community Bank Deposit Access Act of 2025 (H.R. 5317), which would allow custodial deposits to be held by community banks without being considered brokered deposits, provided the custodial deposits do not exceed 20% of banks’ total liabilities.  

• The Keeping Deposits Local Act (H.R. 3234), which would raise the percentage threshold of reciprocal deposits that may be held by a bank without being considered brokered deposits, which are subject to certain capital and interest-rate restrictions.  

• The Main Street Depositor Protection Act (S. 2999), bipartisan legislation to provide increased insurance coverage for small-business customers while minimizing additional costs for community banks.  

ICBA Input: In a statement for the record ahead of the hearing, ICBA and 25 state affiliates said permanent solutions to deposit insurance reform will proactively bolster the safety of the financial system.  

Principles for Reform: In recently released principles for deposit insurance reform, ICBA encourages lawmakers to:  

• Promote depositor confidence in community banks.   

• Curb too big to fail.   

• Control the cost of deposit insurance for community banks.   

• Provide increased coverage for uninsured deposits.   

• Expand the FDIC’s ability to protect community banks and their customers during crisis.   

• Protect the bank-funded DIF for bank resolutions.   

Blog Post: In a recent blog post, ICBA President and CEO Rebeca Romero Rainey said the large bank failures of 2023 demonstrated the clear need to reform the nation’s deposit insurance system and bipartisan legislation has provided a good starting point for these discussions.