Wisconsin Bankers Association: Budget Reconciliation Package Includes Complete Deposit Insurance Reform

CONTACT: Cheryl McCollum, 608/441-1216, cmccollum@wisbank.com

Wisconsin Bankers Association Applauds Passage of Bill

(MADISON) – The House completed final action on the budget reconciliation package (S. 1932) today, passing the amended conference report by a vote of 216-214. The bill includes a comprehensive deposit insurance reform that by 2010 will allow the government to increase deposit insurance levels for banks above the current amount of $100,000.

The general deposit insurance limit will remain at $100,000 until April 1, 2010 when the amount will be adjusted for inflation every five years. The Wisconsin Bankers Association has supported the increase due to the fact that inflation has eroded the real value of coverage considerably since the last increase occurred in 1980.

“The passage of this bill is good news for consumers who will eventually see higher levels of coverage for deposit insurance,” said Kurt Bauer, president/CEO of the Wisconsin Bankers Association.

In addition, the bill increases the retirement fund size the FDIC can insure from $100,000 to $250,000. The retirement fund size will also be subject to indexing increases. “This significant increase will reassure those saving for retirement that their money will be extremely safe in an FDIC-insured financial institution,” said Bauer. “It will also encourage others to save even more for their future.”

In addition, Bauer said this bill creates greater government efficiencies by merging the Bank Insurance Fund and Savings Association Insurance Fund into a new Deposit Insurance Fund. The Federal Deposit Insurance Reform Act also provides the FDIC added flexibility in the unlikely situation that the fund faces financial difficulty.

In the early 1930s, when 30 percent of the nation’s total banks failed, Congress established the Federal Deposit Insurance Corp. (FDIC). The FDIC offered coverage to all U.S. commercial banks. Federal deposit insurance succeeded in stabilizing the banking system; since the 1930s the United States has experienced no banking panics.

House passage of this action now clears the way for President Bush to sign the legislation into law.


The Wisconsin Bankers Association is the state’s largest financial industry trade association, representing 300 commercial banks and savings institutions and their nearly 27,000 bank employees.