Congress Merges Deposit Insurance Funds

Congress has passed a bill that merges the bank and thrift deposit insurance funds and raises deposit insurance coverage on retirement accounts.The deposit insurance reform bill raises federal deposit insurance for retirement accounts from $100,000 to $250,000. The bill also allows the Federal Deposit Insurance Corp. to raise the $100,000 standard maximum deposit insurance on savings accounts and other deposits to reflect the impact of inflation. The FDIC can make the first inflation adjustment in 2010. Merging the Bank Insurance Fund and the Savings Association Insurance Fund has been a major legislative goal of the FDIC for nearly a decade. Meanwhile, banks and thrifts have been seeking higher deposit insurance coverage. "It's been six years in the making, but the lengthy legislative process has helped to produce a well-thought-out bill," said Edward Yingling, president and chief executive of the American Bankers Association. The deposit insurance reform bill passed as part of a controversial $40 billion deficit reduction bill that cleared the Senate Dec. 21 by a 51-50 vote.