Hartford Business Journal

10 HARTFORDBUSINESS.COM | NOVEMBER 17, 2025 Stephen Lewis, president and CEO of Thomaston Savings Bank, says increasing the FDIC insurance cap from $250,000 to $10 million would help smaller banks compete with larger institutions for big commercial customers. HBJ Photo | Steve Laschever Deposit Divide CT community bankers back $10M FDIC insurance limit proposal to compete with larger rivals Bankwell Bank has $3.2 billion in assets and paid $3.35 million to the FDIC in 2024, according to its annual report. Level playing field The nation's larger banks may object to the bill for another reason: greater competition. Stephen Lewis, president and CEO of Thomaston Savings Bank, said the $10 million cap would allow smaller banks to compete with large institu- tions for big commercial customers. Thomaston Savings has assets of $1.9 billion and deposits of $1.6 billion. "I think it kind of levels out the playing field a little bit for those larger commercial customers that may be more concerned about leaving that much money in a community or a regional bank," Lewis said. That's because, since the 2008 financial crisis, the nation's largest banks have been considered too big to fail, meaning big businesses do not have to worry if a Bank of America or JPMorgan Chase runs into financial trouble. "The federal government would never, ever let them fail," Lewis said. "They would come in and … cover everyone." Following the wave of bank failures in 2023, some of Thomaston Savings' business customers considered moving their money to larger banks, concerned they had too much with one institution — "a concentration of risk," he said. David Rotatori, president and CEO of Naugatuck-based Ion Bank, which has $2.8 billion in assets and $2.3 By David Krechevsky davidk@hartfordbusiness.com I n March 2023, three U.S. banks failed within four days of each other. Two of them — California-based Silicon Valley Bank (SVB), with $209 billion in assets, and New York-based Signature Bank, with $110.4 billion in assets — represented the third- and fourth-largest bank failures in U.S. history. Although about 89% of SVB's $172 billion in deposits and 90% of Signa- ture's $89 billion exceeded the Federal Deposit Insurance Corp.'s $250,000 coverage limit, regulators announced that all depositors at both banks would be made whole — meaning even those with balances above the cap would not lose a dime. That decision reignited debate over the FDIC's insurance limits and has spurred a bipartisan push in Congress to raise the cap to as much as $10 million for certain business and transactional accounts. The effort has drawn support from both Sen. Elizabeth Warren (D-Mass.) and Trump Administration Treasury Secretary Scott Bessent. Large national lenders have objected, saying the change would increase their assessment costs, but some community bank executives in Connecticut argue that higher coverage could help level the playing field. They note that during periods of financial stress, corporate, municipal and business customers often shift deposits to the largest institutions, viewing them as safer and "too big to fail." One local banker said deposits at all banks, large and small, should be fully insured. Depositor protection Increasing the deposit insurance limit is included in the "Main Street Depositor Protection Act," sponsored by Sens. Bill Hagerty (R-Tenn.) and Angela Alsobrooks (D-Md.), who are both members of the Senate Banking Committee. Under the bill, the $10 million cap would apply only to noninter- est-bearing transaction accounts at banks and credit unions, which generally are used by businesses to hold payroll and money from online transactions. (Credit union depositors are insured by the National Credit Union Administration, not the FDIC.) In announcing the bill on Nov. 3, Hagerty said the measure has support from groups including the Independent Community Bankers of America, the Mid-Size Bank Coalition of America and America's Credit Unions, calling it a reform that would bolster regional and community banks' roles in a stronger, more stable financial system. The nation's largest money-center banks, however, have raised opposi- tion to the bill, according to published reports, arguing they already contrib- uted more than $9 billion to rebuild the FDIC insurance fund in late 2023, and that raising coverage limits would add billions in new costs. The FDIC fund, in fact, is funded primarily through quarterly assess- ments on banks based on their total assets. Stamford-based Webster Bank, for example, is the largest bank head- quartered in Connecticut, with $83.2 billion in assets. In 2024, it paid $10.3 million to the FDIC, according to its annual report. In contrast, New Canaan-based

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