Rep. Schiff Introduces Deposit Insurance Reform Act
Washington, DC — Today, Congressman Adam Schiff introduced the Deposit Insurance Reform Act which would allow for an increase in the Federal Deposit Insurance Corporation (FDIC) insurance coverage amount for qualified business accounts within banking institutions that opt-in.
“We must not let deregulation and mismanagement by senior bank executives impact hard-working American families. We saw the catastrophic impact when SVB failed earlier this year, with bank executives turning a personal profit ahead of the failure, while workers’ paychecks were in limbo and taxpayers were left in the lurch. The Deposit Insurance Reform Act will protect depositors, consumers, and workers and restore confidence in the U.S. banking system,” said Schiff.
Deposit insurance is a crucial part of the American banking system, but the FDIC deposit insurance cap has not been raised since the 2008 financial crisis. Recent high-profile bank failures have demonstrated the need for deposit insurance reform, and FDIC Chairman Martin Gruenberg has directed the agency to analyze the current deposit insurance framework and identify reform options for Congress’ consideration. Based on the recommendations from the FDIC analysis, the Deposit Insurance Reform Act aims to offer larger amounts of deposit insurance for qualified business expenses like employee payroll.
In the aftermath of the SVB bank failure, Rep. Schiff introduced the Deliver Executive Profits on Seized Institutions to Taxpayers (DEPOSIT) Act in response to the SVB collapse. The DEPOSIT Act would hold executives of failed banks that receive federal assistance like SVB accountable for the mismanagement of the funds they were trusted with by allowing the Treasury Department to claw back bonuses and stock profits – ensuring they are held financially responsible and the burden of their actions doesn’t land on the shoulders of consumers or taxpayers.
The full bill text is here.
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