On November 19, the U.S. House Committee on Financial Services reported it held a hearing to examine the federal deposit insurance framework, specifically the costs and benefits of recently proposed reforms. Members and witnesses discussed the challenges of raising coverage limits for certain accounts, the ambiguity in current FDIC data reporting, and the need for more information before enacting legislation.

Chairman French Hill (R-AR), Rep. Bryan Steil (R-WI), and Rep. William Timmons (R-SC) were some of the members who questioned whether the FDIC’s current data is sufficient to enact the proposals under consideration. Rep. Roger Williams (R-TX) noted that 99 percent of deposits are already insured under current limits, but stated there is a lack of detailed data on how increasing those limits would affect business and personal accounts.

Committee members, including Rep. Andy Barr (R-KY) and Rep. Ann Wagner (R-MO), stressed the importance of maintaining public trust in the banking system and preserving the diversity of financial institutions. Rep. Barr raised concerns about moral hazard, and others noted the potential for increased costs to banks, and the risk of shifting liabilities to taxpayers if deposit insurance coverage is expanded. Witnesses argued that reforms should focus on improving the system rather than “inflating” it, with calls for targeted deposit insurance for business operating accounts and rules that reflect the realities of community banks.