ICBA supports bill to improve deposit insurance system

ICBA expressed support for deposit insurance reform legislation it said is an important start to strengthening the nation’s deposit insurance system that minimizes additional costs for community banks.

Details: Introduced by Sens. Bill Hagerty (R-Tenn.) and Angela Alsobrooks (D-Md.), the Main Street Depositor Protection Act (S. 2999) would:

• Provide expanded deposit insurance coverage of up to $10 million per depositor for deposits held in noninterest-bearing transaction accounts.

• Ensure that during a 10-year transition period, no bank with assets of $10 billion or less would be required to pay any special assessment or increase in assessments to the FDIC to offset any impact on the Deposit Insurance Fund’s reserve ratio resulting from the additional insurance coverage.

ICBA View: In a letter to Hagerty and Alsobrooks, 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.

Statement: In a national news release, ICBA President and CEO Rebeca Romero Rainey thanked the senators for introducing the bill. “Expanding deposit insurance coverage for noninterest-bearing transaction accounts while mitigating higher costs on locally based community banks will further strengthen our banking system,” she said.

Treasury Support: Treasury Secretary Scott Bessent indicated support for congressional efforts to modernize deposit insurance during last week’s Federal Reserve Community Bank Conference. At the conference, Bessent said 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.

Engagement: Through ICBA’s Deposit Insurance Working Group, ICBA is working to advance principles for deposit insurance reform for community banks. Revisiting deposit insurance requirements is a key platform in ICBA’s “Repair, Reform, and Thrive” plan.Revisiting deposit insurance requirements is a key platform in ICBA’s “Repair, Reform, and Thrive” plan.