The high-profile bank runs this year, and the Federal Deposit Insurance Corporation’s decision to guarantee deposits at banks that failed in March, led lawmakers to start talking about raising the cap on deposit insurance for the first time since the last financial crisis.
The FDIC stepped into the debate again this month, this time to recommend raising the cap on some business accounts. The agency’s report has added a specific debating point for members of Congress, but interviews suggest they are no closer to consensus. One objection is the ability to segregate one type of account from others and give it special treatment.
The $250,000 cap on insurance covers more than 99 percent of accounts, but the amount of uninsured bank deposits has grown dramatically in the last decade, leaving the institutions vulnerable to runs, the FDIC says, with about 47 percent of deposited funds uninsured in 2021, the highest amount since 1949.
