<p>WASHINGTON-The federal financial regulators went on record again for the Senate Banking Committee explaining their different points of view on deposit insurance reform. NCUA did not testify on the issue because, other than seeking parity with the banks' insurance coverage, credit unions are not affected by the issue. The banking industry is working to merge the Bank Insurance Fund and the Savings Association Insurance Fund within the agency, as well as creating a range for the reserve ratio, rather than the hard line 1.25%, and restructuring premium assessments. What the industry, and regulators, cannot agree on is whether to increase deposit insurance coverage. Senator Phil Gramm (R-Texas), the Banking Committee's ranking member, has voiced strong opposition to the increase and has even said he would go along with a decrease. Apparently, the only one who thinks increasing deposit insurance coverage is necessary is the Federal Deposit Insurance Corporation (FDIC) itself. "Deposit insurance played a significant role in ending the banking crisis of the Great Depression by re-establishing financial stability," FDIC Chairman Donald Powell explained in his prepared remarks. "During the more recent crisis [of the 1980's and early 1990's], there were no bank panics, no disruptions to financial markets and no debilitating effect on overall economic activity." However, Federal Reserve Board Chairman Alan Greenspan pointed out that even if the original 1934 coverage of $5,000 were indexed to today's dollars, it would only come to $60,000 of coverage. While Greenspan admitted that deposit insurance coverage prevented bank runs in the short-term, on the other hand, he said, "there are growing concerns that even the current levels of deposit insurance have created such underwriting imbalances at insured depository institutions that future large systemic risks have arguably risen." U.S. Treasury Undersecretary for Domestic Finance Peter Fisher emphasized, "Increased coverage limits would provide no benefit to the overwhelming majority of Americans but, as taxpayers, it would expose them to additional risk. Higher coverage limits would mean greater contingent liabilities of the government and weaker market discipline, exposing the insurance fund and taxpayers to increased risk of loss. "Weighing the ephemeral benefits of increased coverage against the significant costs of added risk and the erosion of market discipline, the Administration cannot support an increase in coverage limits, whether directly or by indexing." Comptroller of the Currency John Hawke and Office of Thrift Supervision James Gilleran also testified in support of the changes to the deposit insurance system with the exception of increasing the coverage. [email protected]</p>