The US is poised to exempt smaller lenders from kicking in extra money to replenish the government’s bedrock deposit insurance fund, and instead saddle the biggest banks with much of the bill. The DIF, as the fund is known, is a linchpin of the US financial system as it’s used to insure most accounts for up to $250,000. It’s refilled by all insured banks paying quarterly fees known as assessments.
The move to use the DIF to cover uninsured depositors has jump-started a long-simmering debate over whether the $250,000 cap needs to be raised. On Monday, the FDIC said it supported expanding coverage to business and laid out three options for overhauling the fund.