Sens. Hagerty, Alsobrooks introduce bill to expand deposit insurance coverage

Financial Regulation News

Sens. Hagerty, Alsobrooks introduce bill to expand deposit insurance coverage

By Dave Kovaleski

U.S. Sens. Bill Hagerty (R-TN) and Angela Alsobrooks (D-MD) introduced legislation that expands deposit insurance coverage for noninterest-bearing transaction accounts.

The Main Street Depositor Protection Act directs the Federal Deposit Insurance Corporation (FDIC) to set a new cap between $250,000 and $5 million of additional deposit insurance coverage for noninterest-bearing transaction accounts at eligible banks and credit unions. The bill seeks to enhance overall financial stability and strengthen small and mid-sized lenders.

"The banks that serve Main Street must have the same chance to succeed as the banks that serve Wall Street," Hagerty said. "This bipartisan, bicameral bill advances the Administration's priority of preserving the central role of regional and community banks in the financial system of the future. It's narrowly targeted to address a very specific concern that manifested itself in the events surrounding the collapse of Silicon Valley bank - a run on non-interest bearing transaction accounts typically used to make payrolls by small businesses that are very important customers for our local and regional banks."

Sens. Jim Banks (R-IN), Catherine Cortez Masto (D-NV), Cindy Hyde-Smith (R-MS), and Ruben Gallego (D-AZ), cosponsored the bipartisan bill.

"This bipartisan legislation would require a data driven process to increase deposit insurance coverage levels for business checking accounts at most banks and credit unions. Our small businesses are the backbone of the American economy, and they often rely on community banks and credit unions. Responsibly raising the deposit insurance threshold will protect employees and businesses in times of crisis and strengthen our overall financial system," Alsobrooks said.

U.S. Rep. Frank Lucas (R-OK) introduced companion legislation in the U.S. House of Representatives.

"The Main Street Depositor Protection Act ensures banks of all sizes continue to play a fundamental role in driving economic growth in their communities," Lucas said. "I'm proud to support President Trump's Main Street agenda by introducing a targeted bill that preserves Oklahoma banks' competitiveness and enhances financial stability across the nation."

The legislation is supported by the The Independent Community Bankers of America, the Mid-Size Bank Coalition of America, and the Tennessee Bankers Association, among other groups.

"The Independent Community Bankers of America appreciates the introduction of Main Street Depositor Protection Act, which advances the important deposit insurance reform debate to support and improve our nation's successful deposit insurance system by providing increased insurance coverage for small businesses while minimizing additional costs for community banks," Rebeca Romero Rainey, ICBA president and CEO, said. "Expanding deposit insurance coverage for noninterest-bearing transaction accounts will support the stability of bank deposits used to fund loans and support local economies."