ICBA releases principles for deposit insurance reform to focus policy debate

With lawmakers deliberating deposit insurance reform proposals, ICBA this week released recommended principles to inform the debate.

Details: In the principles, 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 new Main Street Matters 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 recently introduced bipartisan legislation has provided a good starting point for these discussions.

New Bill: ICBA recently expressed support for the Main Street Depositor Protection Act (S. 2999) introduced by Sens. Bill Hagerty (R-Tenn.) and Angela Alsobrooks (D-Md.). In a letter to the lawmakers, ICBA said the bill is a great step to promote balanced deposit insurance coverage across the banking industry, strengthen the deposit insurance system, and support small businesses that use transaction accounts for payroll and other recurring expenses.

Treasury Support: Treasury Secretary Scott Bessent recently indicated support for congressional efforts to modernize deposit insurance, saying he was “encouraged to see emerging bipartisan support for increasing FDIC insurance limits on noninterest-bearing transaction accounts.”

More Advocacy: ICBA last month called on Congress to consider deposit insurance reforms in a statement for the record for the Senate Banking Committee hearing on deposit insurance reform.

Key ICBA Priority: Revisiting deposit insurance requirements is a key platform in ICBA’s “Repair, Reform, and Thrive” plan.