FOR IMMEDIATE RELEASE
ICBA Applauds Congressional Passage of Landmark Deposit Insurance Reform
Association Led Effort to Strengthen System and Nation's Communities
Washington, D.C. (February 1, 2006) - The Independent Community Bankers of America (ICBA) applauded Congress for passing comprehensive, ICBA-backed deposit insurance reform legislation.
"This measure strengthens the nation's deposit insurance system and offers the nation's communities and consumers even greater stability in our financial system," said David E. Hayes, ICBA chairman, and president and CEO of Security Bank in Dyersburg, Tenn. "Importantly, the legislation will encourage depositors to keep their money in local banks where it can be lent out to build and support local communities."
The bill sets up a permanent system of inflation adjustments, authorizing the FDIC to increase coverage level -- currently $100,000 -- for inflation every five years. The bill also immediately increases coverage for certain retirement accounts to $250,000. "Federal deposit insurance is part of the economic safety net for our nation's families, workers and retirees," Hayes added. "It should not be allowed to wither away. Making sure deposit insurance keeps up with inflation is a priority for ICBA."
The legislation also contains measures to smooth out premium volatility, create a range in which the fund's reserve ratio can float in lieu of a hard target, provide premium credits to institutions that have built up the fund in past years, return dividends to financial institutions when the fund exceeds certain levels, institute a risk-based premium system and merge the bank and thrift insurance funds. "This integrated package of reforms will provide the FDIC needed flexibility in managing the insurance fund and enhances the fairness of the deposit insurance premium system for all banks," said Camden R. Fine, ICBA president and CEO.
ICBA has worked closely with Congressional leaders, especially House Financial Institutions and Consumer Credit Subcommittee Chairman Spencer Bachus (R-Ala.) for the past six years in pushing this bill towards enactment. ICBA congratulates Subcommittee Chairman Bachus for this momentous victory.
ICBA also commends House Financial Services Committee Chairman Michael Oxley (R-Ohio) and Ranking Member Barney Frank (D-Mass.). Special thanks also are extended to Sens. Tim Johnson (D-S.D.), Wayne Allard (R-Colo.), Michael Enzi (R-Wyo.), and Chuck Hagel (R-Neb.) for their years of hard work in pushing deposit insurance reform in the Senate as well as Senate Banking Committee Chairman Richard Shelby (R-Ala.) and Ranking Member Paul Sarbanes (D-Md.) for moving this bill towards enactment.