Top Democrats Say FDIC Should ‘Reexamine’ $250,000 Deposit Insurance Threshold

Sen. Elizabeth Warren (D.MA), and Rep. Maxine waters (D.CA), asserted that Federal Deposit Insurance Corporation should not be. “reexamine” Bank accounts must meet the $250,000 minimum deposit insurance threshold

Silicon Valley Bank had deposits exceeding $250,000. This bank provided services to more than half of the venture-backed healthcare and technology firms in America before it collapsed last week. Silicon Valley Bank’s deposits were guaranteed by regulators so that the rest of the financial system (in which approximately half of deposits exceed $250,000) would be protected against bank runs.

Waters, a senior member on the House Financial Services Committee, stated in an interview with The New York Times, that lawmakers should consider increasing the deposit insurance threshold. “When you have something like Silicon Valley Bank with over 90% of its depositors uninsured,” She made a comment: “do we increase the amount of premiums that banks will pay in order to have a bigger insurance fund or do we just remain the way that we are and take it on a one-by-one basis for consideration?”

Although the current threshold of $250,000 seems to be sufficient for most people’s needs, businesses such as Silicon Valley Bank have higher amounts that are needed to operate and pay employees. Silicon Valley Bank now has FDIC oversight of its holdings. Meanwhile, the Treasury Department (and Federal Reserve) have vowed to insure all depositors who are above and below the $250,000 cap. Regulators also closed Signature Bank on Sunday.

Waters stated that Silicon Valley Bank acquisitions should not be combined with other major financial institutions. “I’m not interested in mergers so much,” She continued. “I don’t want this country to become a country where we rely on just four or five big banks.”

Warren, a member both of the Senate Banking Committee as well as the Senate Finance Committee, commented that lawmakers should be more proactive. “reexamine, just overall, about why we have limits” Above the $250,000 threshold “Some small business, some nonprofit, needs a place to manage its money,” According to a report in The Hill, she spoke out during an interview with CNBC. “They need to be able to make payroll, they need to be able to pay the utility bills, and they need a safe place to have that money where somebody’s going to keep it safe.”

She argued that parts of the Economic Growth, Regulatory Relief and Consumer Protection Act, which was signed in 2017 by former President Donald Trump, should be repealed. This Act is intended to allow banks with assets between $50 billion and $250 trillion to have better oversight. Together with Rep. Katie Porter (D-CA), she submitted legislation to implement. “stronger oversight” This would be “help protect our economy from heightened risk.”

“Last week the FDIC was forced to rush in to take over two failing banks, Silicon Valley Bank and Signature Bank, and then take extraordinary actions to protect those banks’ customers and prevent the contagion from spreading throughout the economy,” Warren spoke on the Senate floor. “If Congress and the Federal Reserve had not rolled back key provisions of Dodd-Frank, these banks would have been subject to stronger liquidity and capital requirements to help withstand financial shocks.”

“From Top Democrats Say FDIC Should ‘Reexamine’ $250,000 Deposit Insurance Threshold“

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