Silicon Valley Bank headquarters in Santa Clara, California, on March 13, 2023.
Noah Berger | AFP | beautiful pictures
The U.S. midsize bank union, the Midsize Banks Alliance of America (MBCA), has asked regulators to extend FDIC insurance to all deposits over the next two years, Bloomberg News reported on Saturday citing a letter from MBCA sent to regulators.
The letter argued that expanding insurance would immediately stem the flow of deposits from smaller banks, which in turn would stabilize the banking industry and restore confidence in the banking system, the report said.
The collapse of Silicon Valley Bank, which held a large number of uninsured deposits in excess of limits guaranteed by the FDIC, prompted customers to move their funds to larger banks and caused a meltdown. strong sell-off of bank stocks.
As reported by Bloomberg, the group proposes that the expanded insurance program be covered by the banks themselves by increasing the deposit insurance rating for lenders who opt for the increased insurance.
The FDIC did not immediately respond to Reuters’ request for comment while the MBCA could not be immediately reached.