On November 18, CFPB Director Rohit Chopra released a
statement in connection with an FDIC Board of Directors closed meeting to discuss deposit insurance reform following the failure of a small community bank in Oklahoma. The bank’s collapse was allegedly due to fraudulent misconduct, and according to Chopra, the failure left some local depositors facing losses as their account balances exceeded federal deposit insurance limits. Chopra noted a disparity in deposit insurance protection available for depositors at small banks compared to the protections offered to depositors of larger institutions (which likely serve larger firms) following the banking issues from March 2023.
Chopra called for Congress to remove or dramatically increase the limits on federal deposit insurance for payroll and other non-interest bearing operating accounts. He argued that the current system advantages large banks and their clients unfairly by effectively granting them “free deposit insurance” that is not available to depositors of smaller banks.
