Midsize U.S. banks reportedly ask the FDIC to insure all deposits for two years
The Silicon Valley Financial institution headquarters in Santa Clara, California, on March 13, 2023.
Noah Berger | AFP | Getty Pictures
A coalition of midsize U.S. banks, Mid-Dimension Financial institution Coalition of America (MBCA), has requested regulators to increase FDIC insurance coverage to all deposits for the subsequent two years, Bloomberg Information reported on Saturday citing an MBCA letter to regulators.
The letter argued that extending insurance coverage will instantly cease the exodus of deposits from smaller banks, which in flip will stabilize the banking sector and restore confidence in banking system, the report mentioned.
The collapse of Silicon Valley Financial institution, which held a excessive variety of uninsured deposits past the FDIC assured restrict, prompted prospects to maneuver their cash to greater banks and triggered sharp selloff in banking shares.
In line with the Bloomberg report, the group proposed that the expanded insurance coverage program be paid for by the banks themselves by growing the deposit-insurance evaluation on lenders that select to take part in elevated protection.
The FDIC didn’t instantly reply to a Reuters request for remark whereas MBCA couldn’t be instantly contacted.