FDIC Proposes Reforms to Strengthen Business Banking Insurance
The Federal Deposit Insurance Corporation (FDIC) has recommended that Congress consider expanding its regulatory powers to backstop certain deposits to prevent bank runs. Currently, the FDIC insures bank deposits only up to $250,000, leaving banks with a large share of uninsured deposits vulnerable to runs. The FDIC estimates that as of the end of last year, banks held $7.7 trillion of uninsured deposits, about 43 percent of total deposits in the United States. The regulator has been studying ways to improve the system, including raising the existing insurance cap, expanding it so that deposit insurance is unlimited, and creating a more targeted approach that would provide higher levels of deposit insurance to business accounts that are used for payroll processing.