Four prominent U.S. lawmakers on banking affairs said on Sunday they would consider whether it would be necessary to increase the federal insurance limit on bank deposits to avert a financial crisis. Majority is marked by the withdrawal of large, uninsured deposits from smaller and regional banks.
“I think raising the FDIC insurance ceiling is a good move,” Senator Elizabeth Warrena Democrat, said on CBS’s “Face The Nation,” referring to the Federal Deposit Insurance Corporation’s current $250,000 limit per depositor.
When asked how much the new, higher level should be, Warren, a member of the Senate Banking Committee, said: “This is a question that we have to address. Is it $2 million, yes? Is it $5 million? Is it $10 million? Small businesses need to be able to get their money to pay salaries, pay utility bills.”
Warren declined to discuss conversations she has held with the Biden administration about such a move, but said increasing coverage limits “is one of the options that must be made right now.” .”
Senator Mike Rounds, a Republican on the Senate Banking Committee, also questioned whether the $250,000 limit, which was increased from $100,000 during the 2008 financial crisis, was still appropriate. Are not.
“Maybe that’s not enough,” Rounds told NBC’s “Meet the Press.”
He added that regional and smaller banks will want some “assurance” that they can compete with the larger banks and that “it will take a few months for outside consumers to realize that all of this is happening.” All these banks are stable.”
Republican Representative Patrick McHenry, chairman of the House Financial Services Committee, said he would work to address the adequacy of FDIC deposit insurance, but added that he hasn’t had any conversations yet. with Biden administration officials about raising the limit.
McHenry told the same CBS show, “What I’m going to do, though, legislatively and in a supervisory function, is determine if we need to address the FDIC margin.”
During the financial crisis that broke out in 2008, the FDIC temporarily suspended all deposits to protect smaller banks.
Pressure on small and medium-sized banks as deposits continued to flow on Friday despite a move by several large banks to deposit $30 billion into First Republic Bank, an institution rocked by the recession. failure of Silicon Valley Bank and Signature Bank.
Several former officials, including former FDIC chief Sheila Bair, said regulators may need to repeat temporary full guarantees on all U.S. deposits. Under the Dodd-Frank financial reform law, such a move requires Congress to pass a ratification resolution on an expedited schedule.
McHenry said he wanted to look at the trade-off of higher deposit insurance limits, “the moral hazard of taking more risk in the financial sector, and also its impact on public banks.” copper.”
A spokesman for the US Treasury Department declined to comment. Finance Minister Janet Yellen told senators last week that additional guarantees for uninsured bank deposits beyond SVB and Signature Bank would require her to identify systemic risk, the Chairwoman said. Joe Biden and the “great majority” of the Federal Reserve and the FDIC board.
Senator Chris Van Hollen, a Democrat on the Senate Finance Committee, also told Fox News Sunday that Congress and regulators need to address the $250,000 limit, but not banks. also “rescued”.
“There will be a question about how we handle deposits over $250,000 as covered here,” says Van Hollen.
