Senators Bill Hagerty and Angela Alsobrooks have introduced legislation that would raise the FDIC deposit insurance limit on noninterest-bearing transactions account balances from $250,000 to $10 million. This increase has the support of Treasury Secretary Scott Bessent and Senator Elizabeth Warren. Raising the deposit insurance limit without charging an actuarially fair premium for the additional insurance coverage creates moral hazard risk for the FDIC deposit insurance fund (DIF). This risk can be mitigated if newly insured fund balances are required to be deposited in the Federal Reserve and a share of interest earned on these deposits is passed through to the DIF.
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