"FDIC proposes changes to deposit insurance limits and banking incentives"

The FDIC is proposing an increase in deposit insurance for business payment accounts following recent bank failures. The agency's report did not specify the appropriate increased level of deposit insurance for business payment accounts. The FDIC considered two other deposit insurance reforms but found that targeting business accounts for increased insurance was the best option since it has the largest "financial stability benefits relative to its costs." Increasing deposit insurance poses a moral hazard and a cost associated with raising the insurance cap. It would most likely require Congressional action and result in increasing the premiums that banks pay to the FDIC.