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Sunday, December 3, 2023
NewsCongress plans to increase federal deposit insurance limit

Congress plans to increase federal deposit insurance limit

Four U.S. lawmakers overseeing banking issues said Sunday they would consider raising the federal deposit insurance cap to avert a financial crisis as large uninsured deposits run out at smaller regional banks.

“I think increasing the Federal Deposit Insurance Corporation (FDIC) insurance limit is a good move,” Democratic Senator Elizabeth Warren told CBS, referring to the current FDIC limit of 250,000. $ per depositor.

Asked what the new higher limit should be, Warren said: “It’s something we need to work on. Will it be $2 million, $5 million? $10 million? Small businesses should be able to count on the money to pay salaries and pay utility bills. »

Republican Senator Mike Rounds also questioned whether the $250,000 cap, which was raised by $100,000 during the 2008 financial crisis, was enough.

“Maybe that’s not enough,” Rounds said in an interview with NBC.

Republican Congressman Patrick McHenry said he would work on the issue of FDIC insurance adequacy, but added that he had no conversations with Biden administration officials about the issue. ceiling increase.

Senate Treasury Committee Democrat Chris Van Hollen also said in a Fox News interview that Congress and regulators should decide whether to raise the deposit insurance cap, but not all banks should not be “saved”.

“What will be the mechanism (of insuring deposits over $250,000), if we do it at all, is a question that remains to be discussed,” Van Hollen said.

Recall that during the financial crisis of 2008, the FDIC temporarily provided all deposits to save small banks.

Concerns over deposit outflows from small and medium-sized banks continued on Friday despite the fact that several large banks placed $30 billion in First Republic Bank, an institution affected by the collapse of Silicon Valley Bank (SVB) and of Signature Bank.

Recall that Treasury Secretary Janet Yellen told senators last week that she, President Joe Biden, and the vast majority of Federal Reserve and FDIC board members will need to identify systemic risks to ensure uninsured deposits in banks other than SVB and Signature Bank.

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