Senators Bill Hagerty (R-TN) and Angela Alsobrooks (D-MD) introduced legislation this week to enlarge deposit insurance coverage for non-interest-bearing transaction accounts, such as checking or payroll accounts.
The Main Street Depositor Protection Act would give $10 million in additional deposit insurance coverage to eligible banks and credit unions.
This means that the federal government would guarantee up to $10 million per person if a bank fails. Currently, the federal government backs at least $250,000.
According to Hagerty’s press release, the bill attempts to protect small and mid-sized bank lenders. The bill proposal does not apply to foreign banks or big global banks.
If the bill becomes law, the federal government will implement these protections over 10 years, and smaller banks won’t pay extra fees as a result of the changes.
Hagerty said the potential banking reform would strengthen “regional and community banks’ central roles in the financial system of the future.”
“A stronger and safer banking system will benefit all Americans,” he explained.
Alsobrooks noted extending this type of insurance will “protect small businesses, community banks, credit unions, and the people they serve.”
“I want small businesses in Maryland and across the country to have security in the event of another Silicon Valley Bank crash. All small businesses that bank with smaller lenders deserve to have confidence their deposits are safe,” she said.
Several organizations, such as Independent Community Bankers of America, Mid-Size Bank Coalition of America, America’s Credit Unions, Tennessee Bankers Association, and Tennessee Credit Union League, have endorsed this bill proposal.
Jim Nussle, America’s Credit Unions CEO, noted this bill would “ensure small businesses have faith in their local financial institutions such as credit unions, so that they can work with a trusted community credit union for their financial needs instead of a Wall Street mega bank.”
He called the reform “commonsense” and something that will “help credit unions continue to meet their mission of helping Main Street America.”
Colin Barrett, the Tennessee Bankers Association’s CEO, said the bill proposal gives more confidence for “depositors while protecting community banks from higher premiums.”
“It’s a smart, balanced approach that helps local banks keep serving the customers and communities that depend on them,” he stated.
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Zachery Schmidt is the digital editor of The Star News Network. Email tips to Zachery at zschmidt1717@gmail.com.|
Photo “Bank Teller” by Myfuture.com. CC BY-ND 2.0.
