Deposit Insurance Reform Bill Reintroduced

WASHINGTON-House Financial Institutions and Consumer Credit Subcommittee Chairman Spencer Bachus (R-Ala.), in alliance with the leadership of the full Financial Services Committee, resurrected legislation to reform the deposit insurance system. As in the past few years, the bill would merge the Bank Insurance Fund and the Savings Association Insurance Fund; end the 23 basis point premium `rate cliff’ when the reserve ratio falls below 1.25% for more than a year; create a reserve range; increase coverage limits to $130,000 and index that amount to inflation into the future; double coverage limits for certain IRAs and 401(k)s; and increase coverage limits for municipal deposits. Credit unions have been following the bill to ensure that the National Credit Union Share Insurance Fund receives equal treatment with regard to the coverage increases. Committee Chairman Mike Oxley (R-Ohio), Ranking Member Barney Frank (D-Mass.), and Committee Member Darlene Hooley (D-Ore.) are cosponsoring the bill. “Like other government programs that form part of the economic safety net for America’s families, deposit insurance should be periodically adjusted for inflation to ensure that its value does not erode over time,” Bachus said. “The system has gone 25 years without such an adjustment – the longest period in its history-and the modest increases provided for in our bill are critical if deposit insurance is to maintain its relevance.” The bill is identical to H.R. 522 that passed the House last Congress by a vote of 411-11 and H.R. 3717, which passed the House in the 107th Congress by a vote of 408-18.