A coalition of midsize US banks calls on the government to insure all deposits for the next two years, following Silicon Valley Bank’s decision emergency rescue which insured all of the company’s deposits, regardless of their size.
Driving the news: The Mid-Size Bank Coalition of America has sent a letter to regulators arguing that a temporary suspension of the FDIC’s deposit insurance limit is necessary to ensure that smaller banks can weather the current banking crisis, Bloomberg reported.
- “This will immediately halt the outflow of deposits from smaller banks, stabilize the banking sector and significantly reduce the risk of further bank failures,” the letter reads, according to Bloomberg.
- Tesla CEO Elon Musk also endorsed the idea in a Posting on Twitter early Saturday, saying the move was necessary to “stop the bank runs.”
Why is this important: After the sudden collapse of Silicon Valley Bank and Signature Bank of New York, the spotlight is on banks that may also be vulnerable to a sudden outflow of deposits.
- The FDIC currently insures deposits up to $250,000, though the agency’s move to protect SVP and Signature depositors suggests a broader willingness to support customer funds.
- Separately, Bloomberg also reported that billionaire investor Warren Buffett was in contact the White Housefueling speculation that it could provide financial support to regional banks.
The recipients : The MBCA sent its letter to Treasury Secretary Janet Yellen, the FDIC, the comptroller of the currency and the Fed, according to Bloomberg.
what we watch: If Washington responds to growing clamor to expand FDIC deposit protection. California Democratic Rep. Ro Khanna Set to Introduce Legislation That Removes Agency Coverage Cap, Dealbook announced Saturday.