ABA Deposit Insurance Task Force Recommendations

The deposit insurance and resolution framework, which lies at the core of money and banking in the United States, is complex, multifaceted and foundational to our financial system and the U.S. economy. Created in 1933, deposit insurance promotes financial stability by helping to prevent runs and stem contagion should depositors lose confidence in a single institution or the industry more broadly. Bank resolutions, which take place outside of the codified bankruptcy framework, help mitigate the costs of failures and ensure depositors have timely access to their funds. The Federal Deposit Insurance Corporation (FDIC), which oversees and manages deposit insurance and resolutions, is fully funded through assessments paid by banks, not taxpayers.

The current deposit insurance and resolution framework has served the nation well. The failure of Silicon Valley Bank (SVB) in March 2023 renewed questions about whether deposit insurance coverage levels are keeping pace with the needs of all depositors, and if, given the speed at which money moves today, the FDIC needs a more modern set of tools that allow swift action to manage and mitigate a modern stress event. Moreover, as the resolution of SVB unfolded, it became clear that a more robust and transparent process is needed around systemic risk determinations and the subsequent special assessments levied on banks. Importantly, no taxpayer funds were used in SVB’s resolution. Instead, the costs were borne by the Deposit Insurance Fund (DIF), which is funded by bank assessments.

Since the failures of March 2023, the failure of First National Bank of Lindsay, Oklahoma, in October 2024 raised questions about the fairness of resolutions, whether the FDIC should more rigorously consider the costs of a failure to local economies, and how to allow for greater community bank participation in the acquisition of failed banks. Combined, these policy questions have led Congress, the FDIC, and the banking industry to consider how the deposit insurance and resolution framework, which includes the tools the FDIC has to mitigate a stress situation, could be modernized to reflect the needs of today’s depositors, banks and communities while promoting financial stability and a level playing field for banks of all sizes.

When most policymakers, depositors and other stakeholders think about deposit insurance, they tend to focus on the deposit insurance coverage limit, which currently stands at $250.000. Deposit insurance coverage limits, however, are only one aspect of the framework, which also includes the structure and management of the DIF, resolution of failed banks, the role of the FDIC in an emergency, and how deposit insurance fits into financial stability and the broader supervision and regulation of banks. A meaningful review of the deposit insurance framework, then, must consider these aspects.

To assess the need for modernization and provide the banking industry’s perspective to the policy debate, ABA consulted with the breadth of its membership, comprised of banks of all sizes from the smallest community banks to midsize and regional banks and the largest globally active institutions. In the spring of 2023, ABA convened a member working group to identify areas in need of modernization and recommend policy solutions. In January 2025, the ABA formed an executive-level Task Force to further refine policy recommendations that could be helpful to Congress, regulators and other stakeholders. What follows are ABA’s recommendations for modernization of the framework. Throughout ABA’s work over the past two years, what is clear is that there are no simple or “right” answers, and that there are difficult tradeoffs in any of the varied policy options. ABA intends this report to be an initial set of recommendations based on currently available information that we hope advances the policy debate surrounding deposit insurance modernization.

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