‘Congress must raise the bank deposit insurance limit to $10 million’
Earlier this month, as Silicon Valley Bank and Signature Bank failed in rapid succession, federal regulators took the extraordinary measure of waiving the Federal Deposit Insurance Corporation (FDIC) deposit insurance limit of $250,000 for those two institutions. Citing a “systemic risk exception,” the move protected uninsured depositors–but only at these two banks. Absent a more permanent policy change, many depositors fear that their money won‘t be guaranteed unless it’s in a large, “systemically important” bank. In order to restore confidence in the banking system and stem the dangerous outflow from regional and community banks, Congress must act now to raise the FDIC insurance limit to $10 million. This threshold would provide meaningful protection to small and medium-sized businesses and ensure a solid base of deposits that arent susceptible to bank runs. Two of the primary policy goals of FDIC insurance are to provide confidence and stability in the banking system. Exception-based coverage undermines these objectives. It signals to depositors that they get some extra protection at a systemically important bank. As a result, larger depositors are moving their balances out of regional and community banks and into the biggest national banks, further consolidating our financial system into the hands of a few