Last Updated on March 19, 2023 by Bitfinsider
According to reports, the Mid-Size Bank Coalition of America (MBCA) has requested that federal regulators in the United States prolong insurance on all deposits for another two years.
In a statement to the Federal Deposit Insurance Corporation (FDIC) on March 18, the MBCA, a group of mid-sized American banks, claimed that covering “all deposits” would “immediately halt the exodus” of deposits from smaller banks.
Additionally, the MBCA allegedly stated that this move would “stabilize” the banking sector and greatly reduce the likelihood of “more bank failures.”
The MBCA further suggested that the insurance program be paid for by the banks themselves by increasing the deposit-insurance charge on lenders who choose to take part in the expanded coverage.
In a March 19 tweet to his 250,000 followers, Crypto Law Lawyer founder John Deaton warned that if the FDIC fails to provide a guarantee, up to 300 institutions may collapse.
This comes in response to a recent analysis by economists that was released on March 13 and showed a significant number of banks are vulnerable to uninsured deposit withdrawals.
According to the report, “almost 190 banks are at a potential risk” of impairment to insured depositors, with “potentially $300 billion of insured depositors at risk,” “even if only half of uninsured depositors” opt to withdraw.
Tom Emmer, the majority whip of the US House of Representatives, questioned claims that the FDIC is “weaponizing recent instability” in the financial industry to “purge legal crypto activity” from the US in a letter to Martin Gruenberg, the head of the FDIC, dated March 15.
These acts, according to Emmer, are “deeply inappropriate” and may cause “broader financial instability.”
In addition, the Federal Reserve stated on March 13 that Michael Barr, Vice Chair for Supervision, is “leading a review of the supervision and regulation” of Silicon Valley Bank in “light of its failure,” with a report due to the public on May 1.
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