Deposit Insurance Bill Looks Familiar

The deposit insurance reform bill introduced early in Congress looks a great deal like that which was offered in the last Congress. Backed by House Financial Services Committee Chairman Michael Oxley (R-OH), ranking member Barney Frank (D-MA), and Financial Institutions Subcommittee Chairman Spencer Bachus (R-AL), the bill would increase coverage limits for individual accounts to $130,000 (and index future limits to inflation), doubles coverage limits for certain types of IRAs and 401(k)s; merges the Bank Insurance Fund (BIF) and the Savings Association Insurance Fund (SAIF); ends the 23-basis-point premium known as the "rate cliff" that kicks in when the reserve ratio of deposits insured to premiums held falls beneath 1.25% for more than one year, and creates a reserve range within which the reserve ratio can float.