The Taxpayers Protection Alliance, National Taxpayers Union, and fourteen other organizations sent a letter to Congress on May 18 urging lawmakers to reject a proposed expansion of federal deposit insurance coverage. The coalition opposes S.4198/H.R. 8087, known as the “Main Street Depositor Protection Act,” which would allow the Federal Deposit Insurance Corporation (FDIC) to increase coverage for certain noninterest-bearing transaction accounts up to $5 million.
Supporters of the letter say that expanding deposit insurance in this way would expose taxpayers to greater risk and impose new regulatory requirements on banks. The proposal represents a significant increase from the current FDIC cap of $250,000 per account.
Ross Marchand, Executive Director of the Taxpayers Protection Alliance, said: “This reckless deposit insurance proposal is a costly solution in search of a problem. More than 99 percent of deposit accounts are already fully insured under the FDIC’s existing $250,000 cap, and businesses seeking additional coverage can readily access private-sector alternatives. Instead of strengthening the financial system, this legislation would crowd out private innovation, expand moral hazard, and saddle taxpayers and consumers with billions of dollars in new costs.”
Marchand also said: “TPA has repeatedly warned that dramatically expanding deposit insurance would force the FDIC to impose massive new assessments on banks, followed by billions of dollars more in higher annual premiums. These costs will not simply disappear nor be absorbed by financial institutions. They will be passed directly onto consumers through higher fees, lower returns on deposits, and reduced access to credit. At a time when policymakers should be removing barriers to lending and investment, this proposal would do the exact opposite, especially harming underserved and rural communities that depend on affordable access to capital.”
He concluded: “This proposal is an abdication of congressional responsibility that will put taxpayers on the line for massive bailouts. Lawmakers should reject this misguided expansion of federal power and put taxpayers and consumers first.”
Washington D.C.-based Taxpayers Protection Alliance Foundation is a non-profit organization founded in 2011 that advocates for government transparency through public education efforts such as research and analysis about excessive taxation or spending at all levels; its current president is David Williams according to its website.
