To amend the Federal Deposit Insurance Act to make changes to the Standard Maximum Deposit Insurance Amount, and for other purposes.
- Sponsor
- Rep. Gottheimer, Josh [D-NJ-5]
- Committees
- Financial Services Committee (primary)
- Last action
- Oct 15, 2026
Bottom line
This bill substantially raises the federal deposit insurance cap and introduces inflation indexing, aiming to enhance financial stability and depositor confidence while requiring further study on optimal insurance levels.
What it actually does
This bill significantly increases the federal deposit insurance limit from $250,000 to $750,000 per depositor, per insured institution, and mandates annual adjustments to this amount based on the Consumer Price Index. It also requires the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA) to jointly conduct a study on the appropriate standard maximum deposit insurance amount and report their findings to Congress.
Proponents argue
Proponents argue that increasing the deposit insurance limit provides greater security for depositors, especially during periods of economic uncertainty, and helps prevent bank runs by reassuring account holders that a larger portion of their funds is safe. They also contend that indexing the limit to inflation ensures its value is maintained over time, protecting depositors from the erosion of purchasing power.
Opponents contend
Opponents might argue that a substantial increase in the deposit insurance limit could expose the Deposit Insurance Fund to greater risk, potentially requiring higher premiums from banks or taxpayer bailouts in severe crises. They may also contend that it could encourage riskier behavior by banks or depositors, knowing a larger portion of deposits is federally guaranteed, leading to moral hazard.
The bill is very short and straightforward, allowing for a quick read and easy understanding of its core provisions.
Section 1(a)(1)
Increase Standard Maximum Deposit Insurance Amount (SMDIA)
This provision amends the Federal Deposit Insurance Act to raise the maximum amount of deposit insurance provided by the FDIC for each depositor, per insured bank, from the current $250,000 to $750,000. This change significantly increases the federal guarantee on individual bank accounts, offering greater protection for larger deposit balances.
Supporters argue
Supporters argue this increase provides crucial stability to the banking system by reassuring depositors, particularly those with larger balances, that their funds are safe, thereby reducing the likelihood of panic withdrawals during financial stress and preventing contagion.
Critics contend
Critics might argue that such a large increase could exacerbate moral hazard, encouraging both depositors and banks to take on more risk, as a greater portion of potential losses is borne by the Deposit Insurance Fund, potentially increasing future costs.
Tradeoffs
The tension lies between enhancing depositor confidence and overall financial system stability versus potentially increasing the moral hazard and the overall contingent liability of the Deposit Insurance Fund, which is funded by banks.
Section 1(a)(2)
Annual Inflation Adjustment for Deposit Insurance
This provision mandates that starting January 1 of the year following enactment, and annually thereafter, the FDIC must adjust the $750,000 deposit insurance limit based on the percentage increase in the Consumer Price Index for All Urban Consumers (CPI-U) for the most recent 12-month period. Any adjusted figure will be rounded down to the nearest $10,000.
Section 2
Joint Study on Appropriate Deposit Insurance Amount
This section requires the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA) to jointly conduct research and analysis and submit a report to Congress within one year of the bill's enactment. The report must determine the appropriate standard maximum deposit insurance amount, considering factors like institutional assets, distribution of deposit balances, the ratio of insured to uninsured deposits, and the effects on the Deposit Insurance Fund.
The annual CPI adjustment to the Standard Maximum Deposit Insurance Amount (SMDIA) will be rounded down to the nearest $10,000.
Section 1(a)(2)(ii)
Why it matters:This is standard legislative practice for specifying calculation details to ensure clarity and administrative simplicity, avoiding complex fractional amounts in financial figures.
Case for: Proponents would argue that rounding down to the nearest $10,000 provides a clear, consistent, and administratively simple method for adjusting the insurance limit, avoiding complex fractional amounts and ensuring a conservative approach to increasing the federal guarantee.
Case against: Critics might argue that rounding down, especially to a significant increment like $10,000, could slightly diminish the full inflation protection intended by the CPI adjustment, potentially leaving depositors with a marginally lower insured amount than a precise calculation would yield.
Estimated impact: The impact is minor, potentially resulting in a slightly lower SMDIA than a precise CPI calculation would suggest, but it ensures administrative ease and avoids complex fractional amounts.