Mid-sized US banks seek FDIC insurance for ‘all deposits’ for two years: Report

The Mid-Size Bank Coalition of America (MBCA) has reportedly asked US federal regulators to extend insurance for all deposits for the next two years.

According to a March 18 report by Bloomberg, the MBCA — a coalition of mid-sized U.S. banks — sent a letter to the U.S. Federal Deposit Insurance Corporation (FDIC) arguing that extending insurance to “all deposits” would “stop the exit immediately.” of small bank deposits.

The MBCA also stated that this measure would “stabilise” the banking sector and significantly reduce the chances of “new bank failures”.

It added that the MBCA proposed that banks self-fund the insurance program by raising the deposit insurance assessment for lenders willing to participate in the increased coverage.

Related: Marathon Digital: Signature Bank deposits are safe and accessible

John Deaton, the founder of Crypto Law Lawyer, predicted in a March 19 tweet to his 250,000 followers that up to 300 banks could go bankrupt if the FDIC is unable to provide a guarantee.

This comes after a recent analysis by economists, published on March 13, showed that many banks are at risk due to withdrawals from non-stabilized deposits.

The report revealed that “even if only half of uninsured depositors” choose to withdraw, “nearly 190 banks are at potential risk” of harming insured depositors, with “potentially $300 billion worth of insured depositors at risk.”

Meanwhile, US House Majority Whip Tom Emmer stated in a March 15 letter to FDIC Chairman Martin Gruenberg, questioning reports that the FDIC is “weaponizing recent instability” in the banking sector to “clean up legitimate crypto.” activities’ from the United States

Emmer warned that these actions are “deeply inappropriate” and could lead to “wider economic instability”.

Additionally, the Federal Reserve announced on March 13 that Vice Chairman for Supervision Michael Barr “is leading a review of the supervision and regulation of Silicon Valley Bank” “in light of its failure” and that the review must be made public. by May 1.

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