Washington – This week, U.S. Senator John Hickenlooper joined Senators Joe Manchin and Mike Braun in introducing the Deposit Security Act, legislation to create a new, permanent version of the Transaction Account Guarantee (TAG) program to provide additional stability to regional and community banks. This bipartisan legislation was borne from the closures of Silicon Valley Bank (SVB), Signature Bank, and First Republic in early 2023.
“We need to restore trust in our banking system. In the wake of SVB and other banks collapsing, real change is needed. Our bipartisan bill will protect depositors—from working families to new small businesses—and help level the playing field for community banks and credit unions,” said Senator Hickenlooper.
The TAG program would provide deposit insurance – up to $10 million – for noninterest-bearing transaction accounts (NIBTAs), which are primarily used by businesses for payroll and other operating expenses. This program aims to strengthen depositor confidence by making sure more of their money is insured. The existing $250,000 deposit insurance cap would be adjusted for inflation every two years.
If enacted into law, Hickenlooper’s bipartisan bill would ensure that our nation’s community and regional banks have additional tools to sustain their safety and soundness, maintain deposit levels, and compete with the largest financial institutions.
“The three major bank failures earlier this year are a stark reminder that American consumers and small businesses are reliant on the stability of the US banking system,” said Senator Manchin.“I am proud to introduce this bipartisan legislation with Senators Braun and Hickenlooper that simultaneously ensures small businesses and consumers in West Virginia and throughout the country have more protections for hard-earned money and provides additional stability for the backbone of our banking system – community and regional banks. I urge my colleagues on both sides of the aisle to support this commonsense legislation to maintain a resilient economy and to ensure Americans can continue to be confident in our banking system.”
“Small businesses are the backbone of our economy. They deserve to have the same protection from loss when they choose to bank in their own communities rather than ‘too big to fail’ banks. This bill would level the playing field for community banks and promote confidence that in the face of a bank failure, businesses will have access to their hard-earned deposited funds to pay their employees. This bipartisan legislation would bring stability to community banks and their business customers by removing the risk of loss from deposit accounts that are commonly used to meet payroll and other business transaction purposes,” said Senator Braun.
A one-page explainer of the Deposit Security Act can be found HERE.
Full bill text is available HERE.