Calls for Increased FDIC Insurance Coverage Gain Momentum on Capitol Hill.

Lawmakers are considering ways to increase the deposit insurance cap, at least temporarily, to prevent depositors from pulling their money out of smaller institutions that have been at the center of recent bank runs. Some lawmakers are in talks about introducing bipartisan legislation that would temporarily increase the deposit cap on transaction accounts, which are used for activities like payroll, with an eye on smaller banks. The midsize Bank Coalition of America has urged federal regulators to extend F.D.I.C. insurance to all deposits for the next two years, saying in a letter late last week that it would halt an “exodus” of deposits from smaller banks. However, some experts warn that enacting broad-based deposit insurance could set out a dangerous precedent, signaling to bank managers that they can take risks unchecked, and leading to calls for more regulation to protect taxpayers from potential costs.