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Contact:	Robert Schmermund (202) 857-3104 Jim Eberle (202) 857-3145	Jim Eberle (202) 857-3145 (work) (703) 893-2593 (home) [email protected]	For Immediate Release September 13, 2001 #01-57
E-mail: [email protected]

U.S. BANKING EXECUTIVE CALLS FOR INCREASE IN DEPOSIT INSURANCE COVERAGE OF RETIREMENT ACCOUNTS

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WASHINGTON, D.C. — A U.S. banking executive and chairman of America’s Community Bankers, the national trade association for community banks of all charter types and sizes, has called on Congress to increase the protection of retirement accounts held at banks by increasing their federal deposit insurance coverage.

David A. Bochnowski’s remarks were made in Tokyo Wednesday in an address to the 12th Special Seminar on International Finance. The conference was attended by more than 200 top executives of Japanese banks, foreign banks and other financial institutions in Japan, and high officials of Japanese financial regulatory agencies. The conference was sponsored by Nikkin, The Japan Financial News Co., Ltd.

Bochnowski is chairman, president and CEO of Peoples Bank, SB, Munster, Ind.

Noting that ACB has been a leading advocate of deposit insuance reform, Bochnowski said: “Coverage for retirement savings accounts should be increased to an amount substantially above the general coverage level. It is important to all savers, but especially to retirees and those nearing retirement,” he said.

“Now Congress must keep faith with those saving for retirement. It must close the loop between the promise and the reality of tax-advantaged savings it has created and increase deposit insurance coverage on retirement accounts. Today, $100,000 in deposit insurance coverage for retirement accounts is insufficient and inadequate. Our government must increase deposit insurance coverage for retirement savings accounts, and it needs to do so now.”

Bochnowski noted that before 1980, retirement savings accounts enjoyed coverage of $80,000, twice the amount for other accounts. But in 1980, Congress increased the coverage of both types of accounts to $100,000. “We need to get that differential back,” he said.

“Restoring the insurance differential on retirement accounts would provide a new, stable source of funding and strengthen the American banking system.”

Bochnowski cited data from the Federal Deposit Insurance Corporation showing that retirement account deposits held at insured banks and savings institutions rose to about $221 billion in 2000 from about $216 billion in 1999. During the same period, the value of retirement savings invested in mutual funds declined, he said.

Banks are now the first choice for a safe haven for retirement savings, Bochnowski said, and government policy must match that activity. “Retirees and those saving for retirement need the protection that increased deposit insurance coverage for retirement savings would provide,” he said.

“It would add stability to our economic system and a new measure of security for our senior citizens. And it could encourage savings, something Americans are not doing now.”

Bochnowski suggested two ways that deposit insurance coverage could be increased for retirement accounts. “It could come through reforms of federal deposit insurance. Or it could come as part of President Bush’s proposal to privatize a small portion of our Social Security payments, especially if bank savings accounts are one option for those investments, as they should be.

“ACB supports the president on that goal, as we supported him on his tax cut proposal because it provided increased tax-advantaged retirement savings,” he added.

America’s Community Bankers is the national trade association committed to shaping the future of banking by being the innovative industry leader strengthening the competitive position of community banks. To learn more about ACB, visit www.AmericasCommunityBankers.com.

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