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U.S. considering FDIC coverage for all bank deposits - Bloomberg

AuthorAmbar Warrick
Published 03/20/2023, 09:01 PM
Updated 03/20/2023, 09:05 PM
© Reuters

By Ambar Warrick

Investing.com -- U.S. officials are considering ways to temporarily expand Federal Deposit Insurance Corporation coverage to cover all bank deposits, Bloomberg reported on Monday, citing sources with knowledge of the matter.

Treasury officials are reviewing whether regulators have the capacity to temporarily insure deposits bigger than the current $250,000 cap, without gaining consent from Congress.

While such a step is not seen as necessary, especially after sweeping moves from the Treasury and Federal Reserve this month to stem a potential banking crisis, authorities are considering increasing coverage if the situation worsens.

U.S. regulators had seized control of three regional banks and rolled out emergency liquidity measures allowing banks to meet mounting withdrawals. While the move helped establish some calm in markets, traders remained on edge over any further bank collapses, especially as several European banks also began warning of liquidity concerns.

This saw Swiss bank UBS Group AG (NYSE:UBS) take over beleaguered peer Credit Suisse Group (NYSE:CS) in a deal brokered by regulators. 

Regional lender First Republic Bank (NYSE:FRC) is also facing a potential cash shortage, which has spurred concerns over lenders with high amounts of uninsured deposits.

Several other midsize U.S. banks have called for broader government intervention amid a growing cash crunch for smaller lenders.

One means of covering deposits being considered by the Treasury is by using the Exchange Stabilization Fund, Bloomberg reported. The fund is under full authority of the Treasury, and has been used as a backstop for the Fed’s emergency lending facilities in recent years.

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The Treasury's considerations come as several smaller banks also called for expanded deposit coverage by authorities, amid fears of a widespread banking collapse.

But lawmakers have warned against such a move, stating that it could set a dangerous precedent.

Wall Street futures were trading higher on late-Monday, with the S&P 500 futures, Nasdaq 100 futures, and Dow Jones futures up between 0.07% and 0.2%.

Latest comments

Cprrect. This market is hours Way from collapsing. Should have already repriced down 45% in 2018. But here we are 5 years later. Back to 9 trill on balance sheets and inlation at 6.5%. Which it really is 50-% in the usa. Econ 101. The fed raises the fed funds fate ABOVE THE INFLATION RATE. IF YOU DONT ONOW THAT. YOU HAVE NO BUSINESS BEING IN THE MARKET,FIRST THING YOU LEARN
Someone needs English & Grammar 101….
you can do things like that when you have funny money.
Bailouts 101
Nice, time to withdraw all the money and buy gold before FDLC get bankrupted.
FDIC do not get bank rupt, their funds are backed by additional infusion by government if existing fees reserve gets depleted. Congress has already given the. power to do so. But raising the deposit limit is something which only US could do and undermines other countries.
 But the national debt is already about $34 trillion and will soon be $40 trillion at the current financial condition and the coming recession. What can we expect when the government has to pay $2 trillion interest a year with negative GDP, bankruptcy? Also all countries are dumping US debt and using their own currency for international trading. The value of dollar would quickly depreciate. What is the  meaning to keep dollar in hand in the future?
undermining everyone that trades in dollars. we are driving all our trading partners away. all our allies. it's us against the world.
wow this is insane so we all covered by the plunge protection team 🤣🤣🤣
Technically if they just charge 0.01% of 1% for amounts over $250K, they could cover for it.
how do i start a bank if not then how can we take down this corrupt system
They dont have enough money to cover a banking collapse. Look into it and prove me wrong Karen!
Just Nationalized every bank in the US like North Korea, We will be Permanently Prosperous !
Basically telling banks to do whatever they want because the government will pick up the tab if it doesn't work.
There are over 4 thousand banks in the US. One can get FDIC coverage of 1 billion dollars with so many banks or use a bank like JP Morgan that is not vulnerable to rate hikes.
Hyperinflation
Inflation.
Banks should also raise their interest rates on deposits. Money goes where it's treated best.
Banks can’t expected to run a proper business and play by the rules
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