New op-ed: Deposit insurance reform is critical for Main Street 

Bipartisan legislation supported by the administration is an important starting point for meaningful reforms to the nation’s deposit insurance system, ICBA Chairman Jack Hopkins writes in a new American Banker op-ed. 

Need for Reform: The president and CEO of CorTrust Bank in Sioux Falls, S.D., writes: 

• Deposit insurance is essential to preserving the strength of the nation’s banking system, but it must provide adequate coverage to be effective. 

• Fundamental reforms are needed to promote continued confidence among all bank customers, including small-business customers; to curb the nation’s too-big-to-fail guarantee; and to ensure Main Street community banks do not lose deposits to the largest institutions. 

• The Main Street Depositor Protection Act (S. 2999), introduced by Sens. Bill Hagerty (R-Tenn.) and Angela Alsobrooks (D-Md.), would increase deposit insurance coverage for noninterest-bearing transaction accounts while ensuring community banks are not required to pay for the increase in deposit coverage for a 10-year transition period. 

Recent ICBA Advocacy: In a statement for the record ahead of a House hearing last month, ICBA and 25 state affiliates expressed support for the Hagerty-Alsobrooks bill as well as: 

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.  

ICBA Push for Reform:  ICBA previously released principles for deposit insurance reform, which encourage lawmakers to promote depositor confidence in community banks and curb too-big-to-fail. In a 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.    

Treasury Support: Treasury Secretary Scott Bessent has expressed support for congressional efforts to modernize deposit insurance, writing in the Wall Street Journal that S. 2999 would fortify community banks against existential headwinds by raising the FDIC limit.  

READ THE OP-ED