alan greenspan : federal deposit insurance reform testimony of mr alan greenspan, chairman of the board of governors of the us federal reserve system, before the committee on banking, housing, and urban affairs, u. s. senate, 23 april 2002. * * * chairman sarbanes, senator gramm, it is a pleasure to appear before this committee to present the views of the board of governors of the federal reserve system on deposit insurance reform. i will be addressing general reform issues, as proposed by the federal deposit insurance corporation ( fdic ) in the spring of 2001, rather than any specific bill. consequently, i will be expressing the broad views of the federal reserve board on the issues associated with modifications of deposit insurance. at the outset, i should note that last year's fdic report highlighted the significant issues and developed an integrated framework for addressing them. in broad terms, while the board opposes any increase in coverage, we support the framework for other reform issues that the fdic report constructed. benefits and costs of deposit insurance deposit insurance was adopted in this country as part of the legislative framework for limiting the impact of the great depression on the public. in the environment of the record number of bank failures of the time, deposit insurance in this country was designed mainly to protect the unsophisticated depositor with limited financial assets from the loss of their modest savings. references were made to the " rent money " and the initial 1934 limit placed on deposit insurance was $ 2, 500, promptly doubled to $ 5, 000, a level maintained for the next sixteen years. i should note that the $ 5, 000 of insurance coverage in 1934, consistent with the original intent of congress, is equal to less than $ 60, 000 today, based on the personal consumption deflator in the gdp accounts. despite its initial quite limited intent, the congress over the intervening decades has raised the maximum amount of coverage five times to its current $ 100, 000 level. the last increase, in 1980, was a more than doubling of the cap level and was clearly designed to let depository institutions, particularly thrifts, offer an insured deposit free of the then prevailing interest rate ceilings on such instruments, which applied only to deposits below $ 100, 000. insured deposits of exactly $ 100, 000 thus became fully insured instruments in 1980, but were not subject to an interest rate ceiling. the efforts of thrifts to use $ 100, 000 cds to stem their liquid

kootenai tribes and blackfeet nation. tribal members described the need to address persistent housing challenges and insufficient access to credit in their communities. while there is a range of housing experiences across indian country, many communities face an inadequate housing supply, substandard housing conditions, and limited access to credit for home purchases and improvements. research from the center for indian country development has found that native americans pay more for 1 / 3 bis - central bankers'speeches home loans than white borrowers on average, and the gap widens for native american borrowers living on reservations. 1 in a community roundtable, tribal members of diverse ages and income levels shared their personal stories of struggling to find affordable housing and secure the financing they need. my conversations with bankers and community leaders raised hopeful avenues for addressing these challenges. in a roundtable with community banks, lenders described efforts to expand capital and financial services in indian country. banks are also building their capacity to leverage federal housing resources and navigate the complexities of trust land, but these efforts are time - consuming. these lenders see an opportunity to simplify the administrative complexity of federal housing programs on tribal lands. native cdfis may also offer innovative ways to address housing and other credit needs in indian country. 2 these culturally centered community institutions are finding new ways to support positive credit outcomes and loan performance, and to facilitate mortgage loans in indian country. the modernized cra regulation includes important updates that can benefit indian country by encouraging affordable housing and expanding access to credit, investment, and banking services in native land areas. i'm grateful for the work that the center for indian country development, our fellow regulatory agencies, and organizations serving indian country are doing to help communities understand the new provisions. the new rule reflects changes to the current cra framework intended to clarify and recognize community development activities in native communities. i'm hopeful about the new opportunities these updates open, and i'll highlight a few of those key changes today. one major change is that the updated rule newly defines " native land area " and eligible activities in those areas. in addition, under the new rule, certain investment and community development activities in these areas are given special consideration. this important update will recognize banks providing more banking services, community development financing, and volunteer work in native communities. another key change is that banks can now get credit for qualifying activities that take place outside of their assessment areas. what this means is that even banks whose assessment areas fall outside of native land areas can