Main Street Protection Act Adds $10 Million Insurance for Business Checking Accounts, Excludes Big Banks

The Main Street Depositor Protection Act is a significant move to boost the safety net for operational cash held by businesses. The core of this legislation is simple: it adds an extra $10,000,000 layer of federal deposit insurance coverage specifically for noninterest-bearing transaction accounts—think of your standard, non-interest-earning business checking account—at most banks and credit unions. This protection is stacked on top of the standard $250,000 coverage, meaning a business could have up to $10.25 million insured in that specific type of account. The stated goal here is to keep business payroll and operating funds safe, reducing the risk of bank runs when things get shaky.

The $10 Million Safety Net: Who Gets Covered?

This new insurance limit is a game-changer for mid-sized businesses, startups, and even local governments that often keep large sums in operational accounts to cover immediate expenses. Take a regional construction company, for example, that needs $5 million on hand to cover weekly payroll and materials. Currently, only $250,000 of that is insured. Under this Act, their entire $5 million balance, provided it’s in a noninterest-bearing account, would be fully protected. This enhanced security is available at virtually all community banks and credit unions across the country (SEC. 2).

Where the Line Is Drawn: The G-SIB Exclusion

Here’s where it gets complicated: This boosted insurance isn't universal. The bill explicitly excludes subsidiaries of Global Systemically Important Banks (G-SIBs) and insured branches of foreign banks operating in the U.S. (SEC. 2). If you’re a large corporation or even a mid-sized firm that banks exclusively with one of the handful of massive, globally recognized institutions, this extra $10 million shield won’t apply to your accounts there. This creates a two-tiered system of deposit protection. While the exclusion aims to avoid subsidizing the world’s largest financial institutions, it means depositors at those G-SIBs might still face the pressure of moving large operating balances during a crisis, while their competitors banking locally enjoy full protection.

The Cost of Coverage: A 10-Year Rollout

Insuring an extra $10 million for potentially millions of accounts is a huge liability increase for the FDIC and NCUA insurance funds. The bill acknowledges this by mandating a 10-year phase-in plan for counting these newly insured deposits when calculating reserve requirements (SEC. 2). This slow rollout is designed to keep the insurance funds stable, but it also means the full cost of this added safety net won't be reflected in assessments for a decade. For smaller banks and credit unions—those with $10 billion or less in total assets—there’s a crucial sweetener: they get temporary relief from special assessments related to this new coverage during the transition period. This helps protect smaller institutions from immediate cost spikes while the system adjusts. Ultimately, all insured institutions will eventually bear the cost through future assessments, which could translate into higher banking fees or lower returns for customers down the line.