April 1, 2026

U.S. Senate
Washington, D.C. 20510

Dear Senator,

On March 25, 2026, Sen. Bill Hagerty (R-Tenn.) introduced S. 4198, the Main Street Depositor Protection Act.  This legislation would require the Federal Deposit Insurance Corporation (FDIC) to raise the insurance coverage cap for noninterest-bearing transaction accounts from $250,000 to up to $5 million.  On behalf of the more than one million members and supporters of the Council for Citizens Against Government Waste (CCAGW), I urge you not to co-sponsor or vote for S. 4198.

The higher cap in prior proposals and legislation for noninterest-bearing accounts was $20 million, then it was $10 million, and now it is up to $5 million.  Grasping for an “acceptable” limit cannot obfuscate the lack of evidence for raising the cap to any higher amount for certain deposits.  S. 4198 also delegates to the FDIC the power to create a new category of coverage that could be $5 million or less rather than setting it by statute.  There are exemptions and exceptions that increase government control of the marketplace and undermine competition.

Raising the cap to any level will do nothing to prevent bank failures.  As CCAGW noted in its November 18, 2025, testimony submitted to the House Financial Services Committee, the Federal Reserve Bank’s April 28, 2023, assessment concluded that the primary cause of the March 2023 Silicon Valley bank failure was lack of oversight over the banks’ business models by senior management; failure to manage liquidity risk and anticipate the potential for higher interest rates; and an excessive quantity of uninsured accounts.  The FDIC insurance coverage cap being too low is not among the reasons for the bank’s demise, so increasing it by 8,000 percent, 4,000 percent, or up to 2,000 percent will not prevent another bank failure.

Raising the insurance cap will increase moral hazard, expand government intervention and protection into the marketplace, and increase rather than decrease the potential for a taxpayer bailout when something goes wrong.  I again urge you to oppose this legislation and any future attempts to raise the FDIC insurance coverage cap.  All votes related to S. 4198 may be among those considered for CCAGW’s 2026 Congressional Ratings.

Sincerely,

Tom Schatz
President, CCAGW