WASHINGTON Several House lawmakers introduced legislation Thursday that would raise the deposit insurance coverage limit for in-state municipal deposits.
Under the bill, introduced by Rep. Paul Gillmor, R-Ohio, Rep. Doug Bereuter, R-Neb., Rep. Bob Ney, R-Ohio, and Rep. Stephanie Tubbs Jones, D-Ohio, the coverage limit would equal an institutions total equity capital.
A similar bill that would provide unlimited coverage for municipal deposits was introduced in the Senate this year.
Community bankers, who have been advocating for increased coverage limits, particularly of municipal deposits, said they were pleased with the move.
Municipal deposits are the peoples money, and they should not be put at risk, said Robert I. Gulledge, chairman of the Independent Community Bankers of America. Providing coverage for municipal deposits will free up the investment securities used as collateral, enable community banks to offer a more competitive rate of interest in order to attract municipal deposits, and provide a valuable source of core deposits that can be used for community lending purposes.