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As deposit insurance continues to have its moment in the public eye, the FDIC published a document outlining the “Options for Deposit Reform.”

The report outlines three potential options for reform:

  • Limited Coverage: Maintaining the current deposit insurance framework, while possibly raising insurance limits;
  • Unlimited Coverage: Extending unlimited deposit insurance coverage to all depositors; and
  • Targeted Coverage: Offering different deposit insurance limits across account types, with business payment accounts receiving significantly higher coverage than other accounts.

In the report, the FDIC stated it believes targeted coverage—which would require congressional action—is the most promising option to improve financial stability relative to its effects on bank risk-taking, bank funding and broader markets. In a statementon the report, FDIC Chairman Martin Gruenberg said, “Business payment accounts pose greater financial stability concerns than other accounts while posing a lower risk of moral hazard.”

Last week, the IBAT Executive Committee authorized the formation of a task force to evaluate the FDIC document and consider options that will best serve community banks in the future.