The Introduction of the "Individual Depositor and Community Bank Protection Act of 2008"

THE INTRODUCTION OF THE ``INDIVIDUAL DEPOSITOR AND COMMUNITY BANK PROTECTION ACT OF 2008'' -- (Extensions of Remarks - September 22, 2008)

* Mr. COHEN. Madam Speaker, today I introduced the ``Individual Depositor and Community Bank Protection Act of 2008,'' which raises the federal deposit insurance limit from the current $100,000 to $200,000. This upward adjustment in the federal deposit insurance limit is long overdue. The last increase in the deposit insurance limit--to the current $100,000--was made 28 years ago, in 1980, the year Ronald Reagan was first elected President. This has been the longest period in history in which there has been no raise in the deposit insurance maximum. Since 1980, our nation's economy has changed, with an undeniable increase in income, prices, and wealth. By failing to raise the deposit insurance limit in kind, Congress has effectively weakened the federal guarantee underlying deposit Insurance.

* Deposit insurance, established in response to the financial meltdown of the 1930s that led to the Great Depression, is vital to consumer confidence and to the stability of our nation's banking system. It also is an effective mechanism for ensuring that small community banks can maintain a competitive position vis a 2 vis large national banks. Large banks are not as dependent as small ones on deposit insurance because they are categorized as ``too big to fail'' and will be protected by the federal government should they run into financial trouble. As a result, they have a competitive advantage in securing depositors and in providing loans. Small community banks enjoy no such protection and, as a result, depend on a robust federal deposit insurance guarantee to reassure consumers that their money is safe in a community bank. Weakening deposit insurance effectively gives a competitive upper hand to the ever-shrinking number of large national banks and, in the long run, will limit the vitality and competitiveness of our nation's banking industry.

* At this moment of economic crisis and deep financial uncertainty for millions of Americans, I urge my colleagues to support this straightforward and long-overdue raise in the federal insurance deposit limit. It is vital to maintaining our nation's financial stability, ensuring a solid foundation for economic growth, promoting competition in the banking industry, and reassuring an anxious nation.

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