HR4551-119

What This Bill Does

The Employee Paycheck and Small Business Protection Act expands protection for payment accounts used by businesses, nonprofits, municipalities, and similar organizations. FDIC must fully insure deposits in covered transaction accounts at insured depository institutions up to $100 million per depositor per institution. Covered accounts must be used predominantly for payroll, vendor, and other regular operational payments and must be non-interest-bearing or pay materially below market rates. Parallel Federal Credit Union Act amendments require the NCUA Board to fully insure covered transaction-account deposits or shares in insured credit unions up to $100 million. The bill also requires FDIC to establish a framework for a Temporary Transaction Account Guarantee Program that can fully insure covered transaction accounts for a single period of up to 180 days when two-thirds of the FDIC Board and two-thirds of the Federal Reserve Board recommend action and the Treasury Secretary, consulting the President, determines that failure to act would seriously harm financial stability or economic conditions. Insolvent institutions cannot enroll. FDIC may assess participating institutions and use the Deposit Insurance Fund. The program can be extended once for 90 days with the same high-level approvals and a Treasury report to Congress.

Who Benefits and How

Small businesses benefit from up to $100 million in insurance for covered transaction accounts used for payroll and vendor payments. Nonprofit organizations benefit from expanded protection for operational payment accounts. Municipalities benefit from higher insured coverage for accounts used for regular public payments. Credit union members with covered business accounts benefit from parallel NCUA share insurance.

Who Bears the Burden and How

FDIC must establish expanded insurance and a temporary guarantee-program framework. NCUA Board must establish parallel insured credit union coverage for covered transaction accounts. Participating insured depository institutions may pay assessments for temporary guarantee coverage. The Treasury Secretary and Federal Reserve Board must make financial-stability determinations before emergency implementation or extension.

Key Provisions

• Requires FDIC full insurance for covered transaction accounts up to $100 million per depositor per insured depository institution.
• Requires NCUA full insurance for covered transaction-account deposits or shares at insured credit unions up to $100 million.
• Defines covered accounts as business, nonprofit, municipal, or similar accounts used predominantly for payroll, vendor, or regular operational payments.
• Establishes a temporary FDIC transaction-account guarantee framework for one period up to 180 days.
• Requires two-thirds FDIC and Federal Reserve recommendations, Treasury approval, and a congressional report for any 90-day extension.