Deposit insurance sparks debate between ICBA, ABA

Deposit insurance has emerged as the latest issue over which the two major bank trade associations are debating. The Independent Community Bankers of America is lobbying for an increase in the coverage level to $200,00 per account and wants the level indexed for inflation. In addition, the association is seeking complete coverage of municipal deposits. The American Bankers Association favors a limit to the size of a combined BIF/ SAIF deposit insurance fund. It also wants rebate authority for excess reserves and the merger of the Office of Thrift Supervision with the Comptroller of the Currency. Some of ABA's statements regarding an increase in deposit insurance coverage, however, have been ambiguous, and ICBA says it can't get a straight answer from ABA about its position.

Debate between the two groups arose after a Feb. 16 hearing before the House Banking and Financial Services Subcommittee on Financial Institutions and Consumer Credit. Representatives from the ABA and ICBA were among those to testify. ABA President Hjalma Johnson spoke about the need for a comprehensive approach to deposit insurance reform. ICBA President Tom Sheehan's testimony centered on the need for higher levels of coverage.