The Mid-Size Bank Coalition of America (MBCA) has sent a letter to regulators requesting that the FDIC extend insurance to all deposits for the next 2 years.
According to the coalition's letter, expanding insurance to cover all deposits will stem the withdrawal of deposits from smaller banks immediately, which would then stabilize the financial industry and instill some confidence in the banking system.
Silicon Valley Bank, which held numerous uninsured deposits that were over the FDIC-insured limit, collapsed 2 weeks ago, causing panic among customers at smaller banks and triggering many of them to withdraw their money and deposit it with larger banks. The collapse resulted in the sharp selloff of banking stocks.
In order to pay for the added insurance, the coalition suggested that the banks pay for the extended FDIC program by increasing the deposit-insurance assessment on financial institutions that decide to accept the increased coverage.
Subscribe to our evening newsletter to stay informed during these challenging times!!