Overview
- The Main Street Depositor Protection Act would raise insurance on non–interest-bearing transaction accounts from $250,000 to $10 million at most institutions other than the very largest global banks.
- Analysts and policy advocates estimate the change would force the FDIC to raise more than $10 billion immediately and over $1 billion annually in premiums from banks.
- Opponents warn the expansion would weaken market discipline, increase moral hazard and push larger failure costs onto the Deposit Insurance Fund and potentially taxpayers.
- Critics argue the move would aid a narrow slice of large depositors since roughly 99% of accounts are already fully insured, while SVB’s collapse reflected supervisory lapses rather than inadequate insurance caps.
- Commentary highlights competitive concerns, citing proposed assessment exemptions for banks under $10 billion in assets and expanded coverage for credit unions, while noting existing alternatives such as reciprocal deposits, deposit sweep programs and Federal Home Loan Bank letters of credit.