Press Releases

Today, the House Financial Services Committee, led by Chairman French Hill (AR-02), is holding a hearing entitled, "The Future of Deposit Insurance: Exploring the Coverage, Costs, and Depositor Confidence." This hearing will provide a comprehensive overview of the deposit insurance framework in the United States.

Read Chairman Hill's remarks as prepared for delivery.

"Today’s hearing will examine the deposit insurance framework in the United States, potential reforms that have been proposed, and key questions for policymakers to consider.

"Like the Senate Banking Committee, the House Financial Services Committee has been and will continue to take an approach that is thoughtful, deliberative, and data driven.

"As we’ll hear from our expert witnesses, there are wide-ranging views on this matter with no consensus.

"When it comes to deposit insurance reforms, there are no easy answers and choices always come with tradeoffs.

"That’s why several discussion drafts have been noticed to the hearing today—so that members can appreciate just how many ideas are out there.

"A discussion about deposit insurance cannot be complete unless we also talk about the much-needed improvements to the resolution framework, which were laid bare by the bank failures we saw during the spring of 2023 and made worse by the actions taken by the Biden Administration.

"Let’s be clear: deposit insurance was not the cause of those bank failures.

"They were the result of poor risk management by certain regional banks and the failure of federal and state supervisors to fix problems that had already been identified.

"No level of deposit insurance would have made up for erosion of the failed banks’ identified, deficient management decisions and resulting capital. The banks were insolvent and increased deposit insurance would not have fixed that.

"That’s why legislation addressing policy ideas like the Least Cost Resolution mandate and the national concentration limits must be a part of the conversation if we’re going to take a comprehensive look at deposit insurance and prevent the 2023 bank failures from happening again.

"Going back to its creation during the Great Depression, the FDIC’s Deposit Insurance Fund was intended to stabilize the banking system and now insures deposits up to $250,000.

"Currently, less than one percent of deposit accounts have balances above this level.

"The purpose of deposit insurance was twofold: to protect average Americans and to prevent destabilizing bank runs from occurring.

"This new framework carried a presumption that large depositors, such as corporations and wealthy individuals, had the capacity and resources to assess their bank’s health, to diversify their deposit holdings, secure their deposits or to buy additional insurance on the private market.

"As we consider any potential changes to the deposit insurance framework, I believe our work must be informed by these key questions:

"What is the problem we are trying to solve?

"Who will this benefit?

"What are the costs and who will pay?

"What are the potential unintended consequences?

"Do we have the data to make an informed decision and if not, what are the gaps?

"Our guiding principles should be to ensure the stability of the banking system, maintain depositor confidence, fairly apportion costs, enforce market discipline, and reduce moral hazard."