The FDIC releases a report on options for deposit insurance reform.
- FDIC suggests raising deposit insurance protection for payroll and business payment accounts
- Targeted approach seen as the best option for overhauling deposit-insurance system
- Other options discussed: unlimited insurance for all bank accounts or raising the current $250,000 cap
- Business payment accounts pose greater financial stability concerns
- Recent emergency decision guaranteed full recovery of funds for depositors at failed Silicon Valley Bank and Signature Bank
- Lawmakers considering raising deposit-insurance limit from the current $250,000 per depositor
- Changes require congressional approval and may trigger higher assessments on banks
- Expanded coverage may reassure customers and protect smaller banks from losing deposits to larger institutions
- FDIC's targeted expansion for business accounts is similar to a financial crisis-era program with unlimited federal guarantees for noninterest bearing deposit accounts
- Revised program would allow depositors to move funds to accounts with higher coverage within the same bank, reducing the likelihood of panic-driven bank runs