WASHINGTON-Congressman Spencer Bachus (R-Ala.), chairman of the House Financial Institutions and Consumer Credit Subcommittee, announced that he was holding a hearing last week on the deposit insurance reform bill. "Like other government programs that form part of the economic safety net for America's families, deposit insurance should be periodically adjusted for inflation to ensure that its value does not erode over time," Bachus said. "The system has gone 25 years without such an adjustment – the longest period in its history – and the modest increases provided for in our bill are critical if deposit insurance is to maintain its relevance. The alternative is to simply let deposit insurance wither on the vine, which is an unacceptable outcome for the millions of Americans who depend upon it to protect their savings." The hearing was scheduled for March 17, after press time. The Federal Deposit Insurance Reform Act of 2005 (H.R. 1185) would merge the Bank Insurance Fund and the Savings Association Insurance Fund; eliminate the 23 basis point rate cliff when the fund's reserve ratio falls below 1.25% for more than one year; create a reserve range, similar to the National Credit Union Share Insurance Fund; increase coverage limits to $130,000 per account with an index to inflation for the FDIC and NCUSIF; double coverage on certain Individual Retirement Accounts and 401(k)s; and increase municipal deposit coverage. The bill mirrors bills that have easily passed the House in the past. The Senate, and particularly the coverage increase, has been the stumbling block for the bill in previous years, according to NAFCU Director of Legislative and Political Affairs Brad Thaler. FDIC Chairman Don Powell is the sole witness slated to testify. Credit unions have taken no position on the coverage increase, the only part of the bill that affects them, except to ensure coverage parity with banks. "Even though they increase coverage to $130,000," CUNA Vice President of Legislative Affairs and Senior Legislative Counsel Gary Kohn said, "we have no position on the merit of an increase one way or the other, except for if they do increase coverage for banks and thrifts through FDIC, then they must do the same for credit unions through the NCUSIF." Interestingly, American Share Insurance President and CEO Dennis Adams said, "Any deposit insurance limit adjustment really does not have a lot of affect on us," unless the coverage increase is significant, he noted. ASI offers $250,000 in primary insurance coverage on an unlimited number of accounts, as opposed to the NCUSIF's $100,000 limit per account holder. The private insurer also provides additional coverage through its subsidiary, Excess Share Insurance. [email protected]