WASHINGTON - Sen. Robert Torricelli, D-N.J., introduced a bill Wednesday that would give municipal deposits 100% federal insurance coverage.
The Municipal Deposits Insurance Protection Act of 2001 is supported by community banks that argue full deposit insurance coverage would persuade local communities to put their public municipality deposits into a local bank.
"This does look toward keeping local money in mainstream communities," said Kenneth A. Guenther, executive vice president of the Independent Community Bankers of America. "If a municipality puts money in a bank, it should not be at risk."
The bill will be referred to the banking committee. The legislation is co-sponsored by Sen. Tim Johnson, D-S.D., who is a member of the committee, and Sen. Russ Feingold, D-Wis. Sen. Torricelli introduced similar legislation last session but it never made it out of the banking committee.