October 04, 2023

Manchin, Braun, Hickenlooper Introduce Bipartisan Legislation to Maintain Confidence in Banking System, Strengthen Economy

Washington, DC – Today, U.S. Senators Joe Manchin (D-WV), Mike Braun (R-SD) and John Hickenlooper (D-CO) introduced the Deposit Security Act, which would create a new, permanent version of the Transaction Account Guarantee (TAG) program to maintain confidence in the banking system, provide additional stability to regional and community banks as well as strengthen our economy. This bipartisan legislation was borne from the closures of Silicon Valley Bank (SVB), Signature Bank and First Republic in early 2023.

“The three major bank failures earlier this year are a stark reminder that American consumers and small businesses are reliant on the stability of the US banking system,” said Senator Manchin. “I am proud to introduce this bipartisan legislation with Senators Braun and Hickenlooper that simultaneously ensures small businesses and consumers in West Virginian and throughout the country have more protections for hard-earned money and provides additional stability for the backbone of our banking system – community and regional banks. I urge my colleagues on both sides of the aisle to support this commonsense legislation to maintain a resilient economy and to ensure Americans can continue to be confident in our banking system.”

“Small businesses are the backbone of our economy. They deserve to have the same protection from loss when they choose to bank in their own communities rather than ‘too big to fail’ banks. This bill would level the playing field for community banks and promote confidence that in the face of a bank failure, businesses will have access to their hard-earned deposited funds to pay their employees. This bipartisan legislation would bring stability to community banks and their business customers by removing the risk of loss from deposit accounts that are commonly used to meet payroll and other business transaction purposes,” said Senator Braun.

“We need to restore trust in our banking system. In the wake of SVB and other banks collapsing, real change is needed. Our bipartisan bill will protect depositors—from working families to new small businesses—and help level the playing field for community banks and credit unions,” said Senator Hickenlooper.

The TAG program will provide deposit insurance – up to $10 million – for noninterest-bearing transaction accounts (NIBTAs), which are accounts that are primarily used by businesses for payroll and other operating expenses. This program provides confidence to all depositors– including West Virginia small businesses – by making sure more of their money is insured. This program ensures that our nation’s community and regional banks have additional tools to sustain their safety and soundness, while also providing additional resources to maintain deposit levels and compete with the largest financial institutions. This bipartisan bill also will adjust the existing $250,000 deposit insurance cap for inflation every two years.

In 2008, large financial institutions and the stock market were failing, and credit markets were freezing. The federal government responded with a series of lending and guarantee programs, including the TAG program, to contain the panic and minimize the damage to the economy. Similarly, in March of 2023, three of the biggest banks in the United States failed and to minimize major losses, federal regulators immediately acted to solidify confidence in the banking system. In the months since, regulators have published suggestions on ways to reform the deposit insurance system, including enacting a permanent TAG program.

Bill text of Deposit Security Act can be found here.

A one-pager of the Deposit Security Act can be found here.