The Time To Raise The Maximum Federal Deposit Insurance Coverage

On Monday, September 22, 2008, I introduced H. R. 6986, the Individual Depositor and Community Bank Protection Act of 2008 in the House of Representatives which would raise the maximum federal deposit insurance coverage from the FDIC from $100,000 to $200,000. I offered a similar proposal to House Financial Services Chairman Barney Frank (MA-04) as an amendment to the financial rescue plan.

On Tuesday, Sen. Obama endorsed a measure which would raise the FDIC cap to $250,000 as part of a revised financial rescue package. I welcomed his support and, subsequently, the support of his Republican rival, Sen. McCain. Last night the Senate included this provision in its version of the rescue package, and now, Chairman Frank has pledged to work with his colleagues on the Financial Services Committee to include this plan in a newer version of the rescue package as a vehicle for compromise in the House.

This proposal will not only give consumers more protection in this uncertain environment, but it could help garner more votes from my colleagues who were not willing to support the bill that was defeated on Monday. Every day that passes without a plan, more jobs are threatened as sources of personal and business credit dry up. We need to find areas of common ground, and increasing the FDIC insurance is one issue on which Democrats and Republicans can agree, and I am proud that Sen. Obama is supporting the FDIC hike.

Democratic leaders and I have been discussing this issue for well over a week now, and we certainly welcome the support of Republican Leadership and rank-and-file Republicans to ensure it becoming a part of the rescue plan. So, imagine my surprise yesterday when I found out about a memo being distributed by RNC spokesperson Alex Conant with the headline, "Sen. Obama Steals FDIC Idea from House Republican."

It is true that my friend, Congressman Christopher Shays (R-Conn.) introduced a bill on September 29th that would have raised the FDIC cap to $300,000 (H.R. 7235), but he introduced that legislation a full week after I did. The RNC's spin quickly made its way into stories released by the AP, CBS, the Wall Street Journal and other news organizations who wrongly stated that the idea was being floated only by Republicans. The fact is that I had been lobbying this bill to Democrats and Republicans, and I'd received support from Chairman Frank and Speaker Pelosi since I brought it up in a Caucus meeting to discuss solutions to the financial crisis.

I have no doubt that the Republican National Committee - with its army of researchers - was well aware of my legislation, and this is another example of their reckless disregard for the truth. They have shown time and time again that they will say and do anything to disparage Sen. Obama, and my colleagues and I have an obligation to call them on their fabrications.

We are in the middle of an economic crisis and now is not the time for such petty, fallacious attacks. It's not important who gets the credit for this bill; only that it helps rescue our economy from a major catastrophe.

Comments

[bkbigfish]

Yes, with a national negative savings rate, THIS is the burning issue in this THEIVERY that the senate is inflicting on the taxpayers. Nice try...... what criminals. Please, regardless of your party affiliation, CALL their offices and yell at them.

[CitizenLegislatorCC]

"It's not important who gets the credit for this bill..."

Then why did you write this post, Steve? Sounds like it's important to you (and your political calculations) that Democrats instead of Republicans get credit for an FDIC amendment to a bill that soon NO ONE will want to be taking the BLAME for, as it fails to sustain an unsustainable system of finance.

Regardless, this is what happens when "legislating" is conducted in secret. If the House Financial Services Committee had held a mark-up of this bill anytime in the two weeks since it was ordered through Congress by the White House, the record would show that you offered this FDIC amendment, wouldn't it? And other legislators would have had an equal opportunity to legislate accordingly. Instead, we're told that you PRIVATELY "lobbied" for it.

When democratic process is jettisoned, as it has been in this case by your party leadership, with your apparent acquiescence, there is no VENUE left for debate or negotiation or amendment of legislation by the legislature or committees AS A WHOLE. So political operations like the RNC move in to fill that void. Your party's abandonment of process made this bed, and the whole nation will soon be lying in it.

By the way, who pays for this 100% increase in FDIC limits? The endless national credit card? And why is it a good idea? Care to enlighten us and your colleagues about that at all?

[Martskers]

Lemme see if I understand, Rep. Cohen. I'm about to lose my house because of predatory lending practices, and what you're doing is introducing a bill that will increase the number of apartment buildings that people who've had their homes foreclosed can live in (assuming they can afford the rent)?

Is that supposed to make me feel better? If you and your Democratic pals in both houses want to do something meaningful about this crisis, how about doing something for the millions of homeowners who are about to lose their homes, but who are completely left out of the brilliant bills both you and your Senate colleagues have crafted.

You and your colleagues didn't even have the kohones to include a provision in your bill(s) that would have given bankruptcy judges the ability to re-form the terms of predatory loans. And you want to blow your horn for increasing FDIC insurance coverage?

Remember us? We're your constituents, not the Wall Street fat cats you seem to be more interested in catering to.

[torrrep]

No. You are losing your home because you were not smart enough to read the paperwork before you signed it. Regardless of what they told you, you still have to be able to read every single piece of paper they place in front of you to sign. It's your responsibility to read and understand every item in the mortgage paperwork. You may not have read every single item. But if you had an ARM then I'm sure you knew that the rate was going to change. Several people I know took these introductory teaser rates because they were gambling that home prices would continue to rise. Then when they didn't and couldn't afford the rate change they suddenly wanted to blame predatory lending. You made a mistake. Many people have. Maybe you will learn from your mistake maybe you won't. No one put a gun to your head and forced you to take the loan. You know what you make. You should have been able to figure out what you could and could not afford. If the only way you could afford that home was with the teaser rate then the only one to blame is yourself. Sounds like you bought a home that was out of your price range. Stop blaming everyone else for your actions.

[ohiovoter54]

Ok MR Cohen... if that helps you sleep a little better at night. Give crumbs to us peons. The voters have a loooooong memory. New ticket for 2008 write-in Dennis Kucinich/Marcy Kaptur..REALLY for the people.

[rubinoff]

Hear, hear ^5

[NABNYC]

Most people don't have $250,000. They don't even have $100,000. Boy, talk about a Let Them Eat Cake moment. That's not what's keeping Americans up nights -- worrying about the FDIC. It's job loss, frozen wages, unemployment, usurious credit card interest rates, inflation. What do they put in the water in D.C. that politicians actually think most Americans have $250,000?? Aren't you guys paying any attention at all?

Every politician who has taken a penny from Wall Street has a conflict of interest and should be barred from voting on this Giveaway of my money. But assuming somebody was going to pretend that they cared about the citizens, they could, for example, fo the following: (1) raise interest rates; you keep lowering them, loaning my money to wall street at 2@; what good has that done? (2) put a cap on all interest that can be charged by any financial institution, or anyone, at 10%. (3) if you're giving a penny to any business, get stock of equal value. (4) if you are bailing out homebuyers, take a second trust deed and grab any profits from eventual sale. If this was your money, you'd have no problem coming up with ways to protect yourselves. FDIC isn't even on the list of things Americans worry about.

[torrrep]

I agree with most of your solutions but i disagree with you on the FDIC. Many people do worry about the FDIC. Why? Because it doesn't only apply to individuals. It also applies to small businesses and communities with common interest. For example, I do not have $250,000 but my home owners association does. And being involved with the board of directors and finances I can tell you it is a pain in the rear to have to have deposits at multiple financial institutions because of the limits on insurance for deposited funds. Raising of the FDIC insurance limits can help business owners and associations like mine consolidate their investments and savings into fewer locations. This may not matter to you but it matters to a lot of people.

[gotalife]

Lobbyists win again. They always do. Business as usual.

So, when do we collapse like the Soviet Union?

[newwvdem]

Yeah, I really hope they pass this. I'm getting really tired of splitting up my money and moving it around to keep it in those $100,000 chunks.

[charleydan]

Come on, protect Wall Street and then tell the little guy it helps him, because he happens to be in the way.

Of course how many little ones have over 100 grand in the bank. Or as you propose more then a 100 grand. So Wall Street is sold again to the little guy feel good, until inflation kicks in and again he finds.

a 15 grand car will be 25 grand and the salaires will go from 17 bucks an hour to 19. There you have it all over again. Inflation in a nutshell that all Americans will pay when we come out the otherside.

Of course if we went to the gold standard these pundits would not be able to do this to us. Of course they would not be able to have all these social pet programs so many want or war either. hmmm, sounds like my kind of government, Ron Paul.

[MatoSka]

Personally, rather than leave the Federal Government with more exposure to pay losses through FDIC to commercial banks, I am willing to withdraw my deposits and work on a CASH ONLY basis.

[MourningDude]

This is nice and all, and can't really do any more harm, but seriously, what's the point?

How does this solve anything?

Sure, it might make it a little more convenient for some wealthy people and small businesses to keep their funds in one place, but what is the expected result of this legislation?

Do you expect to save a million jobs, or just to tally a few more votes in the House?

The fact that all this partisan bickering is going on over something that doesn't seem to be that big of a deal in the first place just shows how desperate Congress is, and how they are willing to grasp at any straw that makes it sound like they're contributing something... anything.

[jusion]

Actually I don't think it's a bad idea. No bank runs have happened as of yet but there's a distinct possibility. Such measure would result in greater consumer confidence for the system.

[rubinoff]

ooops,....is shoud be 'House'....

[rubinoff]

Help me out here, what i fail to understand is, 'how can a bill that was 'rejected' by the Houd,.... be amended by the Senate....Something that started out 3 pages and end 450+ pages.
This is all too confusing to me.

[VikingQuest]

If you read most of the stuff on this website we don't need $100l because we are all poor and broke.

[thenextquagmire]

Why not insure CHECKING ACCOUNTS too?

[Adirondacker]

Checking accounts are insured.

http://www.fdic.gov/deposit/deposits/insured/yid.pdf