HomeEconomyUS banks ask authorities to insure all deposits

US banks ask authorities to insure all deposits

An alliance of US banks has asked federal regulators to guarantee all their customers’ deposits, regardless of the amount, for two years to avoid contagion after the failure of two banks.

The measure would “immediately stop the exodus of clients from smaller banks, stabilize the banking sector and greatly reduce the risk of new bankruptcies,” argued the Alliance of Midsize Banks of America, in a letter to authorities.

Currently, in the United States, the agency in charge of guaranteeing deposits (FDIC) protects bank deposits up to 250,000 dollars (232,500 euros), but the letter, cited by Bloomberg, requested on Saturday the protection of all deposits, even above the limit. .

The period of turbulence in the banking sector began on March 8, with the collapse of Silicon Valley Bank (SVB), followed by the failure of Signature Bank, triggering a crisis of confidence in the sector, the alliance said.

“Regardless of the general health of the banking sector, confidence has taken a hit for all but the major banks,” the letter underlines.

The alliance called on the FDIC, the Federal Reserve and Treasury Secretary Janet Yellen to “restore confidence” in the financial system.

The group of banks offered to finance the measure by increasing the amount of contributions they already pay to the FDIC to guarantee customer deposits.

After the collapse of the SVB, many clients of smaller banks decided to withdraw their money to deposit it in larger banks, considered too important not to be bailed out by the US state in the event of a crisis.

In response, the Federal Reserve (Fed), the US central bank, has committed to lending the necessary funds to other banks so they can respond to customer withdrawals.

Source: Observadora

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