Sept. 30 (Bloomberg) -- Barack Obama, the Democratic presidential nominee, today proposed increasing the Federal Deposit Insurance Corp. limit to $250,000 from the current level of $100,000.

This is ``a step that would boost small businesses, make our banking system more secure and help restore public confidence in our financial system,'' Obama, an Illinois senator, said in an e- mailed statement.

Obama said he would propose the idea to leaders of Congress today ``and urge them to act without delay to pass a rescue plan.''

The U.S. Senate is expected to try to salvage a $700 billion financial-rescue package after the measure was defeated in the House of Representatives yesterday.

Keeping the FDIC's fund healthy has been a priority for U.S. regulators because its $100,000 insurance on deposits keeps depositors from panicking when a bank's health is questioned.

In proposing an increase, Obama noted that the current $100,000 limit was set 28 years ago and hasn't been adjusted for inflation.

The Dow Jones Industrial Average dropped 778 points yesterday after the House failed to pass the rescue measure, the biggest point drop ever that erased more than $1 trillion in market value.

To contact the reporter on this story: Nadine Elsibai in Washington at nelsibai@bloomberg.net.

Last Updated: September 30, 2008 06:32 EDT