Deposit insurance reform back in the spotlight, Ohio Bankers League asks for feedback

When Congress returns from recess in September, lawmakers may once again find themselves debating a core element of the banking system: federal deposit insurance. A new bill was filed to put deposit insurance reform back in the spotlight. 

Senators Bill Hagerty (R-Tenn.) and Angela Alsobrooks (D-Md.) filed legislation that would establish a $20 million deposit insurance cap for transaction accounts at banks with less than $250 billion in assets. Transaction, or operating, accounts are often used to hold large sums for short periods of time, such as funds for payroll. While its path to passage is uncertain, with Republicans in control of Congress and the Treasury Department naming deposit insurance reform as a policy priority, lawmakers may have a path to advance legislation. The Senate Banking Committee is reportedly considering a hearing on this bill in early September.  

The estimated costs of the amendment to the industry remain uncertain. Analyses such as one from the Taxpayers Protection Alliance have placed the figure near $30 billion, though experts caution that implementation costs could vary widely. 

The Ohio Bankers League is monitoring the amendment and the broader discussion around deposit insurance reform and is inviting members to provide feedback on how a $20 million transaction account insurance cap could affect your institutions, customers and operations. Your perspectives will help guide OBL’s engagement as the conversation moves forward in Washington. Please send all feedback to Evan Kleymeyer at [email protected].