NASHVILLE, Tenn (WZTV) — A bipartisan group of Tennessee lawmakers have reintroduced legislation that would expand federal deposit insurance coverage for certain bank accounts, aiming to strengthen financial stability and protect small businesses.
The proposal, known as the Main Street Depositor Protection Act, is led by Sen. Bill Hagerty, a Republican, and Sen. Angela Alsobrooks, a Democrat. Additional sponsors include Sens. Jim Banks, Catherine Cortez Masto, Cindy Hyde-Smith and Ruben Gallego. A companion bill has also been introduced in the House by Rep. Frank Lucas.
The bill would direct the Federal Deposit Insurance Corporation, or FDIC, to set a higher insurance cap for noninterest-bearing transaction accounts, such as business checking accounts used for payroll and day-to-day expenses.
Under the proposal, the FDIC would establish a new coverage level between the current $250,000 limit and as much as $5 million per depositor for those accounts.
Supporters say the measure is intended to prevent bank runs and protect smaller financial institutions and their customers.
In a statement, Hagerty said the legislation addresses issues highlighted during the collapse of Silicon Valley Bank, when large uninsured deposits, often used by businesses, were at risk.
“The banks that serve Main Street must have the same chance to succeed as the banks that serve Wall Street,” said Senator Hagerty. “This bipartisan, bicameral bill advances the Administration’s priority of preserving the central role of regional and community banks in the financial system of the future. It’s narrowly targeted to address a very specific concern that manifested itself in the events surrounding the collapse of Silicon Valley bank — a run on non-interest bearing transaction accounts typically used to make payrolls by small businesses that are very important customers for our local and regional banks.”
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Backers also say the bill would help community and regional banks compete with larger institutions and provide more certainty for small businesses that rely on those accounts to pay employees and cover expenses.
