A coalition of more than 100 mid-sized banks is demanding that deposits be insured for two years.
The mid-size bank Coalition of America has urged regulators to extend protections, Bloomberg reported.
Accordingly, the coalition declared that action must be taken to “restore depositor confidence before another bank collapses”.
Federal regulators have been urged to protect all deposits for the next two years to prevent a major run on banks following the recent collapses Bloomberg reported.
The mid-size bank Coalition of America, which represents more than 100 lenders, called for the Federal Deposit Insurance Corporation to take safeguards and extend protection for smaller banks.
Further collapses should be prevented
“It is imperative that we restore depositor confidence before another bank collapses to avoid panic and another crisis,” MBCA wrote in a letter to regulators, Bloomberg reported.
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The group said that the FDIC should expand their protections to reduce the likelihood of further bank failures,” said the newspaper, which received a copy of the letter, which was also sent to the Comptroller of the Currency, Treasury Secretary Janet Yellen and the Federal Reserve.
Under existing rules, only the first $250,000 in accounts is protected by the FDIC.
MBCA said the increased protections would halt the “exodus” of deposits from smaller banks and help “stabilize” the financial sector.
Loss of trust hurts everyone
If the FDIC extends its insurance to all deposits for two years, the banks themselves could pay for it by extending the risk assessment for deposit insurance to lenders who choose to do so, the MBCA said.
The coalition also said confidence in smaller banks had “eroded” and more money could be withdrawn from regional lenders if more banks failed, the report said.
Die Silicon Valley Bank and Signature Bank are collapsed this month after a rush of depositors, while First Republic Bank was bolstered by $30 billion in deposits from a slew of larger lenders.
After regulators took control of SVB, they said they would “fully protect” all deposits in the bank.
The FDIC, OCC, Treasury Department and Federal Reserve declined to comment, according to Bloomberg.
This text was translated from English by Kim Torster. You read the original here.