If far-left Sen. Elizabeth Warren (D-MA) gets her way when it comes to so-called reforms for the Federal Deposit Insurance Corporation (FDIC), conservative groups such as the Taxpayers Protection Alliance (TPA) warn that this will open the door to more of her radical policies and regulations. Last Tuesday, TPA President David Williams and the leaders of over a dozen other conservative organizations sent a letter to Reps. French Hill (R-AR) and Maxine Waters (D-CA), the chairman and ranking member of the House Financial Services Committee. In it, these heads of organizations spell out their issues with proposed regulations.
The signers waste no time in spelling out their issues, as they begin by writing how they're "express[ing] our opposition to legislative or regulatory action that would increase the deposit insurance cap or fully insure all deposits at insured depository institutions on a temporary or permanent basis. Changes to the deposit insurance framework would increase moral hazard, propagate a cycle of risky behavior that forces taxpayers to perennially bail out depositors, and subject insured depository institutions to more government control."
It's not just Warren, but also former Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra who is of concern. The letter links to a Banking Dive article from April 29, "Warren, Chopra warn of ‘real price to pay’ on DOGE." That is where Warren comes in as well, who is, once again, predicably going after Elon Musk and the Department of Government Efficiency (DOGE), as well as President Donald Trump.
There was plenty of fearmongering from Warren referenced in such an article:
- Sen. Elizabeth Warren, D-MA, and Rohit Chopra, former director of the Consumer Financial Protection Bureau... blasted the Department of Government Efficiency’s efforts to reduce federal spending, warning that deep cuts at government agencies could contribute to financial instability.
- “The damage DOGE is doing is everywhere in our economy, including with the financial regulators,” Warren said during a press call on the Trump administration’s economic actions. “There will be a real price to pay for that.”
...
Warren, the ranking member of the Senate Banking Committee, accused President Donald Trump and billionaire Elon Musk of threatening the Federal Deposit Insurance Corp.’s reputation and abilities, and compromising consumers’ confidence in federally insured deposits.
Trump and Musk “are taking a chainsaw to our financial regulators, including the FDIC, and putting at risk the confidence that the American people have built over decades in knowing that that insurance program will work and the bank supervisors will keep a close eye on all of the financial institutions,” Warren said.
FDIC insurance can be counted on “because those regulators are strong and independent, and because they have enough people to be able to do the oversight that is necessary,” Warren said, “and Donald Trump is trying to take all of that away.”
The FDIC is looking to reduce its workforce by about 1,250 employees, the agency said in a memo last week, amid reports that the regulator began working with DOGE to identify positions that could be cut. Warren has grilled FDIC Acting Chair Travis Hill over DOGE’s presence and warned that job cuts could affect the agency’s ability to prevent future bank failures.
"Last [month], former Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra called on Congress to pass legislation expanding the government’s role in deposit insurance, including for business payment accounts," the letter explains. "These proposals would inherently increase risk for taxpayers, who would ultimately be on the hook for insuring deposits."
The letter further explains the concerns, with even more strongly worded warnings to come:
There are practical and philosophical problems with raising the deposit insurance limit, even for business accounts. For one, it increases the difficulty of determining the exact nature of a “business” or “payment” account, terms the Federal Deposit Insurance Corporation (FDIC) has not even attempted to define. This leaves the door open to a vague definition, which effectively raises the limit for everyone. Moreover, creating a separate business account definition opens the door to abuse without significant regulatory constraints, requiring financial institutions to endure additional recordkeeping and supervisory scrutiny to prove an account meets the definition.
We are broadly concerned that expanding government deposit insurance is a Trojan Horse for increased regulation on the banking sector, morphing financial institutions into government-sponsored enterprises like Fannie Mae and Freddie Mac, as proponents of the idea have repeatedly called for.
Ultimately, we believe expanding the federal government’s role in deposit insurance is unnecessary and costly to taxpayers. Raising the deposit insurance limit, including for business payment accounts, would directly contradict laudable attempts to deregulate the financial sector and protect taxpayers.
The letter was signed by Williams, as well as Phil Kerpen of American Commitment; Tirzah Duren of American Consumer Institute; Brent Gardner of Americans for Prosperity; Grover G. Norquist of Americans for Tax Reform; Ryan Walker of Heritage Action for America; Jeffrey Mazzella of Center for Individual Freedom; Iain Murray of Competitive Enterprise Institute; Gerard Scimeca of Consumer Action for a Strong Economy; Tom Schatz of Council for Citizens Against Government Waste; Brandon Arnold of National Taxpayers Union; Gordon Gray of Pinpoint Policy Institute; James Erwin of Shareholder Advocacy Forum; and Karen Kerrigan of Small Business & Entrepreneurship Council.