Lawmakers said federal regulators should raise the cap on insured bank deposits as Washington continues to respond to the shakeout in the U.S. banking system following three bank failures.
Sen. Elizabeth Warren (D., Mass.) told
News’ Face the Nation that lifting the cap, currently at $250,000, “is a good move.” She said the only thing to consider is how high to lift it, possibly into the millions of dollars.
She becomes just the latest lawmaker to suggest a raise to the limit on insured deposits by the Federal Deposit Insurance Corp. Last week, Rep. Maxine Waters (D., Calif.) said Congress should think about taking action.
On Saturday, midsize banks represented by the Mid-Size Bank Coalition of America asked regulators to extend FDIC insurance to all deposits for two years, according to a report by Bloomberg.
Sen. Mike Rounds (R., S.D.) told NBC News’ Meet the Press the current cap might not be enough, and could encourage depositors to move money from smaller banks to the largest U.S. banks that are considered systemically important.
“I want to make sure that we don’t skewer the competition between the very largest banks and those very, very needed medium and small banks that really do the vast majority of the commercial lending in the small communities across the entire United States,” he said.
Regulators backstopped all deposits at Silicon Valley Bank and Signature Bank after their collapse, despite most of those funds being above the current deposit cap. Republicans criticized the move as a bank bailout, something Warren pushed back against.
“Small businesses need to be able to count on getting their money,” Warren told CBS. “These are not folks who can investigate the safety and soundness of their individual banks.”
The FDIC raised the limit to $250,000 from $100,000 in response to the 2008 financial crisis and made it permanent after President Barack Obama signed the Dodd-Frank financial reforms into law in 2010.
Warren criticized the watering down of the Dodd-Frank regulations during the Trump administration, telling NBC and CBS’s Face the Nation that Federal Reserve Chair Jerome Powell took a “flamethrower” to bank rules.
“I want to see us make a change in the laws, roll back the rollbacks to put tougher regulations in place,” she told NBC.
The turmoil in the banking sector extending into another weekend has raised calls for the Fed to pause on more interest rate increases when it meets this week. Warren said on Sunday that the Fed should not raise rates, while Mohamed El-Erian, the chief economic advisor at
told Fox News Sunday the Fed mishandled rate increases.
The Fed moves have “destabilized weak institutions, weak individuals and weak companies,” El-Erian said.
Separately, in a letter dated Saturday to Treasury, the FDIC and the Federal Reserve, Warren called for an investigation into the collapse of Silicon Valley Bank and Signature Banks, asking the regulators to look at the management and oversight of the banks and requesting preliminary results within 30 days.
Write to Liz Moyer at firstname.lastname@example.org