Lucas Highlights Need for Targeted Deposit Insurance Reform

Washington, DC – Today, the House Financial Services Committee held a hearing entitled, “The Future of Deposit Insurance: Exploring the Coverage, Costs, and Depositor Confidence”. Congressman Frank D. Lucas opened by highlighting the need for targeted deposit insurance reform and the benefits of expanded coverage for certain accounts.

OPENING REMARKS AS PREPARED: Lucas: “Today, our banking system is healthy and well-capitalized. Our strength is in the diversity of our nation’s banks in size, business model, and specialization.  But when it comes to deposit insurance and bank failures, there is a difference in how the government treats banks of different sizes.  We saw this most recently when the FDIC provided a backstop under the Systemic Risk Exception for the big banks that failed in the Spring of 2023. But when a small bank in Oklahoma failed last year, that exception wasn’t invoked, and depositors weren’t made whole.  When people hear that their deposits may be safer in a larger institution because of that implicit guarantee by the government, our smaller banks are left at a competitive disadvantage.  I want to focus my questions today on Secretary Bessent’s support for expanding deposit insurance on non-interest transaction accounts as part of President Trump’s community banking and main street agenda. Importantly, Acting FDIC Chair Travis Hill has testified that based on the FDIC’s estimates, they would not need to raise assessments for this expanded coverage.  Though not a silver bullet, this reform is a much-needed improvement and could be part of a broad array of changes that must be made to strengthen our banking system. Mr. Ryan – the FDIC’s report on deposit insurance reform after the large bank failures in March 2023 says that increasing deposit insurance coverage to business payment accounts is the “most promising option” to improve financial stability. What are the benefits to financial stability and increased competition with expanded coverage for these types of accounts?” Witness: “America needs banks of all sizes. I think having a diverse and healthy banking system requires a lot of us. That’s what is unique about the American banking system, so having an increased deposit insurance limit reinforces the stability and strength of this very diverse system we have today.” –Mr. James Ryan, Chairman and Chief Executive Officer, Old National Bancorp, Board member for the Mid-Size Bank Coalition of America and Vice Chair for the American Bankers Association.

You can watch his full remarks by clicking here or on the image above.