CHAIRMAN SCOTT LEADS HEARING ON DEPOSIT INSURANCE REFORM

The following information was released by the U.S. Senate Committee on Banking, Housing, and Urban Affairs:

Senate Banking Committee Chairman Tim Scott (R-S.C.) today led a discussion on deposit insurance and safeguarding the American financial system. Chairman Scott stressed the importance of deposit insurance as a central pillar of consumer confidence and that any action taken to reform deposit insurance should be done in a manner that strengthens the American economy.

Chairman Scott's opening remarks as delivered:

I want to thank our witnesses for appearing before the Committee today.

Your perspectives are critical as we examine the future of deposit insurance and the stability of our financial system.

Deposit insurance is central to the trust and confidence Americans place in their banks, and since its creation in the 1930s, no insured depositor has ever lost a single penny.

In fact, over 99 percent of all deposit accounts are fully insured under the FDIC.

That is why, whether folks in South Carolina are walking into a mid-size bank like United Community or a credit union like Carolina Foothills, they know that when they see that FDIC-insured or NCUA-insured sign, their money is safe.

That confidence is not just a promise on paper; it's peace of mind for hardworking families and small businesses.

That record of protection is a cornerstone of our economy and the reason deposit insurance is often described as the bedrock of our financial stability.

But recent events have thrust deposit insurance into the limelight and raised the question of whether it is time to rethink the current deposit insurance system.

When Silicon Valley Bank and others failed in 2023, deposit insurance played a key role in stabilizing our economy and making sure account holders were safe.

The government had to take extraordinary steps to cover unprecedented amounts of uninsured deposits and there was a "flight-to-safety" as uninsured deposits moved toward the largest institutions in banking.

Those actions underscore both the importance of deposit insurance and the need to carefully evaluate reforms.

But, as I have learned in the past and said as well, reform is not simple. It comes with trade-offs.

Expanding deposit insurance, for example, may provide more security for some small businesses, but if it's not calibrated properly, it comes at a cost to banks, small businesses, and everyday Americans.

The Committee must weigh these trade-offs carefully, with an eye toward what truly strengthens our financial system rather than what simply sounds appealing in the moment.

That is why I have been clear: deposit insurance reform should not be based on rushed decisions.

We are here to build the best policy to protect the American people, promote responsible banking, and maintain confidence and diversity in our financial system from the smallest community banks to the largest institutions.

I am eager to hear from our witnesses today. Your insights each and every one of you your insights will help guide this Committee as we weigh potential paths forward.

Thank you again for being here, and I look forward to this discussion.