A proposed legislation in Congress, billed as a protection for Main Street, would raise bank deposit insurance coverage for business transaction accounts to $10 million. However, critics argue that this move is actually a Big Government power grab, benefiting banks with hundreds of billions of dollars in assets rather than small businesses.

Orwellian Logic

Senator Elizabeth Warren and other DC liberals claim that the bill is needed to help small businesses, such as a small-town dentist, a landscaping company, or a bakery. However, more than 99 percent of all bank accounts have less than $250,000, the current deposit insurance limit. Actual small-town bankers have objected to the plan, warning that it encourages banks to take greater risks and invites taxpayer-guaranteed bailouts while also raising customer fees and reducing credit for the very small businesses it claims to help.

This proposal is really meant to expand Big Government through more regulation, as Senator Warren herself admitted in the past. Deposit insurance is meant to protect families, not big corporations. Large businesses can already buy extra insurance coverage in the private market if they need it. They should pay for their own protection rather than pushing for a taxpayer guarantee that would socialize the cost of bank failures onto the backs of working Americans.

A Better Approach

Instead of rushing ahead with this cynically packaged legislation, we need a deliberate and data-driven approach. Let’s first conduct actual cost and risk estimates about the consequences of expanding federal exposure by more than a trillion dollars. We should also examine the claim that it is better to make taxpayers backstop higher coverage for wealthier depositors rather than simply continuing to utilize widely available and effective market solutions.

Policy makers need a lot more information before once again putting taxpayers on the hook. In the meantime, we should also take a serious look at common-sense legislation in Congress that would reduce regulatory burdens for small-town bankers and revitalize community banking. That includes preventing bank regulators from selectively pressuring bankers to cut off customers involved in energy, mining, firearms, and other important industries that may be currently out of favor among the politically correct tastemakers in Washington.

Original reporting: FITSNews — read the source article.