Kevin Helms
A student of Austrian economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open source systems, network effects and the intersection of economics and cryptography.
Mid-sized US banks ask regulators to extend FDIC insurance to all deposits for 2 years before another bank fails – Regulation Bitcoin News
The Mid-Size Bank Coalition of America has asked federal regulators to expand FDIC insurance to cover all deposits for the next two years. “Doing so would immediately stop the exodus of deposits from smaller banks, stabilize the banking sector and greatly reduce the chances of more bank failures,” the group claimed. “It is imperative that we restore confidence among depositors before another bank fails, avoiding panic and a further crisis.”
Prevention of “panic and further crisis”
The Mid-Size Bank Coalition of America (MBCA) has reportedly asked federal regulators to extend Federal Deposit Insurance Corporation (FDIC) insurance to all deposits for the next two years. MBCA currently represents about 110 banks, including those with assets of about $100 billion.
In a letter to the FDIC, the Comptroller of the Currency (OCC), the Federal Reserve and Treasury Secretary Janet Yellen, seen by Bloomberg News, the group explained:
Doing so would immediately stop the exodus of deposits from smaller banks, stabilize the banking sector and greatly reduce the chances of more bank failures.
The recent failures of major banks, including Silicon Valley Bank and Signature Bank, have prompted many depositors to withdraw their money from regional banks and transfer it to the largest banks in the country, such as JPMorgan Chase and Bank of America. Customers worried about bank failure seek reassurance in institutions perceived as too big to fail.
“Despite the overall health and safety of the banking industry, confidence has weakened in all but the largest banks,” the group stressed. “Confidence in our banking system as a whole must be restored immediately,” the letter continues, noting that deposit flight would accelerate if another bank were to fail.
Their MBCA letter emphasizes:
It is imperative that we restore confidence among depositors before another bank fails, avoiding panic and a further crisis.
“While the cost of deposit insurance is not negligible, the likelihood that it will be needed is much, much less if all deposits were to be temporarily insured,” the coalition wrote.
However, US Treasury Secretary Janet Yellen said in a Senate hearing on Thursday that not all uninsured deposits will be protected in future bank failures. Meanwhile, Congressman Blaine Luetkemeyer has warned that if the government doesn’t guarantee all bank deposits, “there’s going to be a run” on smaller banks.
Do you think the FDIC should cover all deposits for the next two years? Let us know in the comments section below.
Image credit: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or an endorsement or recommendation of products, services or companies. Bitcoin.com does not provide investment, tax, legal or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on content, goods or services mentioned in this article.
