America’s top consumer watchdog is calling for deposit insurance reform.

Rohit Chopra, director of the Consumer Financial Protection Bureau (CFPB) made this argument last week following the failure of Oklahoma lender The First National Bank of Lindsay, according to testimony released by the bureau Monday (Nov. 18).

“Small relationship lenders tend to cater to the tailored needs of local businesses, houses of worship, farmers, schools, and families in the local community,” Chopra told the Federal Deposit Insurance Corp. (FDIC) board, of which he is a member. “As a result of the failure, some depositors in this rural area of Oklahoma are expected to take a loss, since their account balances exceeded federal deposit insurance limits.”

Chopra noted that policymakers took “extraordinary” measures last year to cover uninsured depositors of Silicon Valley Bank and Signature Bank when those lenders failed. In that case, he said, the customers in question were businesses with massive balances, companies from the crypto, streaming media and venture capital sectors.

He argued that it was only possible to protect these uninsured depositors because the collapse of their banks threatened the banking system as a whole.

“In other words, big businesses putting their money in big banks enjoy free deposit insurance, and small businesses putting their money in small banks don’t,” Chopra said. “This is fundamentally unfair. The status quo gives an unfair competitive advantage to the largest banks in the country.”

Small businesses, he added, need reliable banking services. He called on Congress to remove “or at least dramatically increase limits on federal deposit insurance for payroll and other non-interest bearing operating accounts.”

The Bank of Lindsey was closed last month by the Office of the Comptroller of the Currency (OCC) which cited “false and deceptive bank records and other information suggesting fraud,” in its reasons for the closure.

Meanwhile, PYMNTS wrote earlier this month about Chopra’s potentially uncertain future at the head of the CFPB as a new president prepares to take power.

“Given that Chopra was appointed by President Joe Biden and that new administrations tend to place their own choices in various regulatory and governmental roles, however, it’s not a given that Chopra will serve through 2026,” that report said. “If a hypothetical new director comes in who is decidedly less active on the regulatory front, we may see a reckoning for the rules currently under development. (The CFPB can also revoke rules that have already been finalized.)”