Congress quietly shields small banks from insurance costs while expanding deposit coverage
S. 4198 — Main Street Depositor Protection Act · Filed by Bill Hagerty (R-TN) · 6 cosponsors · Introduced Mar 25, 2026 · Referred to committee
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What it does
This bill expands federal deposit insurance to cover noninterest-bearing transaction accounts (checking accounts) beyond the current $250,000 limit, up to a maximum of $5 million per depositor per bank, phased in over 10 years. Small banks (under $10 billion in assets) are exempt from paying special insurance assessments during the transition. The bill applies to both banks and credit unions, but excludes subsidiaries of systemically important banks and foreign bank branches.
Why we flagged it
The bill's core mechanism is expanding FDIC/NCUA coverage for noninterest-bearing accounts, a consumer protection measure. However, the assessment exemption for banks under $10 billion in assets is a direct subsidy to a defined industry segment, making the bill functionally a hybrid of consumer protection and small-bank relief.
What the text implies
- The $5 million cap per depositor per bank creates a cliff: a business with $5.1 million in operating deposits at one bank loses coverage on the excess, incentivizing deposit fragmentation across multiple institutions and increasing systemic complexity.
- Small banks (under $10 billion assets) are exempt from special assessments during the 10-year transition, shifting the cost burden to larger banks and potentially to the Deposit Insurance Fund itself if losses exceed reserves—a hidden subsidy to a politically favored segment.
- The aggregation rule for holding-company subsidiaries means a depositor's $5 million limit applies across all subsidiaries of a single parent, not per subsidiary, reducing effective coverage for businesses using subsidiary accounts for operational separation.
- The exclusion of systemically important bank subsidiaries from the expanded coverage creates a two-tier system: large-bank depositors get no extra protection, while small-bank depositors get up to $5 million, inverting the risk profile (smaller banks are riskier).
- The 10-year phase-in with no subsequent adjustment except by Congress locks in the $5 million cap indefinitely unless Congress acts, creating a static insurance ceiling in an inflationary environment.
Section numbers refer to the bill text the analysis read — linked under Primary records below.
Who it affects
The bill protects small-business owners and payroll processors who hold large noninterest-bearing deposits from catastrophic loss in a bank failure, a genuine public benefit. However, it creates a subsidy for small banks (exempting them from assessments) and raises the risk that the Deposit Insurance Fund may become undercapitalized, potentially shifting costs to taxpayers or other depositors if a large bank fails.
Who stands to gain
- community banks and regional banks (under $10 billion in assets)
- small-business payroll processors and cash-management service providers
- credit unions
Named in the bill
Federal Deposit Insurance Corporation (FDIC), National Credit Union Administration (NCUA), Deposit Insurance Fund, Federal Credit Union Share Insurance Fund, bank holding companies, systemically important banks, foreign banks
Where it stands
6 cosponsors: 3 Democrats, 3 Republicans.
- Mar 25, 2026 — Introduced · Congress.gov: “Introduced in Senate”
- Mar 25, 2026 — Referred to Senate Committee on Banking, Housing, and Urban Affairs · Congress.gov: “Read twice and referred to the Committee on Banking, Housing, and Urban Affairs”
Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.
Money around this bill
9 lobbying clients named this bill on 9 disclosure filings across 1 quarter, Jun 2026 to Jun 2026. Those filings disclosed $7,140,000 in lobbying spend. A filing names 15 bills on average, so that figure is what each filing reported, not a share belonging to this bill.
More lobbying clients named this bill than 89% of bills with at least one filing.
Bill Hagerty, the sponsor, reported $1,618,141 in PAC receipts in the 2026 cycle. $17,500 of that came from 2 PACs tied to these lobbying clients.
- American Bankers Association — $3,510,000 on 1 filing
- Citigroup Washington, Inc. — $1,330,000 on 1 filing
- Jpmorgan Chase Holdings LLC — $1,190,000 on 1 filing
- Charles Schwab Corporation — $480,000 on 1 filing
- Bank of America Corporation — $290,000 on 1 filing
Lobbying Disclosure Act filings through Jul 20, 2026. A filing shows who paid to lobby on a bill it names, not what changed.
How this was measured
Analysis — Quorum's AI read the bill text published by Congress.gov (9,224 characters) on Aug 11, 2026. Section numbers in the findings refer to that text, linked below; transparency and hidden-provision scores are compared against the median of 16,222 analysed bills.
Status and sponsors — Congress.gov's bill record — actions, committee referrals and cosponsors — loaded nightly. The timeline shows status changes, not every procedural action.
Money — Senate Lobbying Disclosure Act filings whose specific-issue field names this bill for quarters ending Jun 2026 to Jun 2026. A filing's amount is reported whole beside the median number of bills a filing names; it is never divided across them. PAC receipts are FEC-reported contributions to the sponsor's candidate committee in the 2026 cycle.
As of — lobbying records through Jul 20, 2026 · page rendered 2026-10-20.
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