A Bigger FDIC Backstop Comes With a Bigger Bill

Deposit insurance protects the money families and small businesses keep in the bank. It’s paid for by premiums that ultimately show up in what customers pay to bank and borrow.

This summer, the FDIC proposed lowering those premiums because the fund has grown strong enough to support it. But proposals to sharply raise the deposit insurance limit for business accounts are still pending in the Senate and the House. They have been offered as amendments to must-pass legislation before, and more must-pass bills are coming before the end of the year.

So why raise the cost of a system that’s already working for Main Street?

Deposit insurance already protects nearly every account

Nearly every household and small business is already fully covered under today’s limits.

• Over 99% of all U.S. deposit accounts already fall below the current $250,000 limit.
• Even the highest earners in America, the top 10% by income, had a median account balance of $111,600.
• The average small business holds $12,100 in its bank account, less than 5% of the current FDIC limit.

The system is doing its job.

A higher limit means higher costs

Expanding FDIC insurance isn’t free. A sharp increase in coverage means drastically higher premiums, and those costs are borne by consumers and small businesses. Families would pay more to borrow, and small businesses would find it harder to access affordable credit.

The current system already protects nearly every account. Any expansion should be weighed against the higher costs it could impose on families and small businesses.
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