HR-4551-119
Referred to the Committee on Financial Services, and in addition to the Committee on Rules, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Sponsored by Maxine Waters (D-CA)
What it does
This bill would direct the FDIC and NCUA to fully insure business, nonprofit, and municipal transaction accounts (payroll and vendor payment accounts) up to $100 million per depositor per institution, with final details set through rulemaking. It would also create a temporary emergency guarantee program allowing full insurance of uninsured transaction accounts for up to 180 days (extendable to 270 days) during a financial crisis, triggered by a joint determination of the FDIC Board, Federal Reserve Board, and Treasury Secretary, and extend existing Deposit Insurance Fund and Share Insurance Fund restoration plans by 8 years.
Who benefits
Businesses, nonprofits, and municipalities holding large payroll or vendor payment accounts, especially those exceeding the current $250,000 insurance cap; community banks and credit unions that could market expanded protection to attract business deposits; minority, rural, and community development financial institutions specifically considered in the rulemaking; and employees whose paychecks would be protected if their employer's bank failed.
Who is hurt
Banks and credit unions that would pay higher FDIC/NCUA assessments to fund expanded coverage, potentially passing costs to all depositors and borrowers; taxpayers and the broader banking industry if the Deposit Insurance Fund or Share Insurance Fund requires longer restoration periods or additional backstopping; smaller depositors who see no direct benefit from the $100 million business account cap; and institutions that may face competitive disadvantages if the rulemaking process favors certain categories of banks over others.
Supporters argue
Supporters argue that the 2023 failures of Silicon Valley Bank and Signature Bank showed that uninsured business transaction accounts holding payroll funds can trigger bank runs and require emergency intervention, and that permanently insuring these accounts up to $100 million would prevent small businesses from being unable to make payroll if their bank fails. They contend the temporary guarantee program, with built-in supermajority votes, congressional testimony, GAO oversight, and a hard 270-day sunset absent a joint resolution, provides a disciplined tool to stop contagion without an open-ended commitment like the 2008 bailouts.
Opponents argue
Opponents argue that guaranteeing deposits up to $100 million per account creates moral hazard by letting large depositors and banks take on risk without bearing consequences, shifting losses onto the deposit insurance funds and ultimately other banks and customers through higher assessments. They contend that expanding insurance this broadly, combined with an 8-year extension of fund restoration plans, signals that the insurance funds may already be strained, and that Congress is effectively pre-authorizing bailout-like guarantees before a crisis occurs rather than addressing underlying bank risk-management failures.
Constitutional context
Congress's authority to structure federal deposit insurance rests on the Commerce Clause and its power over the banking system; the delegation of rulemaking authority to the FDIC and NCUA, including setting a maximum insurance amount and eligibility criteria, will be reviewed post-Loper Bright v. Raimondo (2024) without automatic deference to agency interpretations, and the emergency program's broad discretionary trigger could raise major questions doctrine concerns similar to those in West Virginia v. EPA (2022) given its economic significance.
Checks and balances
Congress delegates significant rulemaking and emergency-program discretion to the FDIC, NCUA, Federal Reserve, and Treasury, but retains checks through mandatory testimony, GAO reporting, sunset provisions, and a required joint resolution of Congress to extend the emergency program beyond 270 days.
Historical precedent
The FDIC's 2008 Transaction Account Guarantee Program and the 2020 temporary unlimited insurance for noninterest-bearing accounts under the Dodd-Frank Act both used similar emergency deposit guarantee mechanisms during financial crises.