GOP lawmaker offers bill to prevent Cyprus-like run on savings accounts

The measure from Rep. Billy Long (R-Mo.) was inspired by the banking crisis in Cyprus, which sent shivers through the markets this week when it considered assessing a levy against all bank deposits to help pay for a bailout of its major banks. 

{mosads}On Tuesday, Cyprus’ parliament rejected the idea of taking money from depositors, which some say could result in a quicker collapse of its banks.

Long said Wednesday that his resolution, H.Res. 129, was introduced to ensure the United States never considers a levy on deposits.

“The government should not tax people’s private savings accounts, which they have already paid taxes on, especially for the purpose of funding more bailouts,” Long said. “I was shocked by the news that some countries might be considering these kinds of taxes, and I think Congress should say that this kind of tax won’t happen in America.”

Long’s resolution says Congress should not consider legislation that confiscates “any or all personal savings held by the American people,” including retirement accounts or other assets. It also says Congress should “refrain from considering or adopting any legislation to provide financial relief to a private business or general sector of the American economy at taxpayer expense.”

The resolution finds that the savings and retirement accounts of Americans “are the personal property of their owners,” and that the government “should not abuse its power by substituting political priorities for the personal economic choices of millions of individual Americans.” It also finds that prior attemps to use taxpayer money to bail out troubled industries “has failed to produce economic recovery.”

As of Wednesday, Long is the only sponsor of his resolution.

Cyprus considered the move after European countries and the International Monetary Fund balked at paying for the entire bailout. But the option of seizing 6.75 percent of small depositors’ savings, and close to 10 percent for those with more in the banks, created immediate fears of a run on Cypriot banks that could spread throughout Europe.

— This story was updated at 10:59 a.m.