The Mid-Size Bank Coalition of America (MBCA) has reportedly asked United States federal regulators to renew insurance on all deposits for the next two years.
According to a March 18 Bloomberg report, the MBCA — a coalition of medium-sized U.S. banks — has sent a letter to the U.S. Federal Deposit Insurance Corporation (FDIC), claiming that expanding insurance on “all deposits” will “immediately halt the exodus.” would stop”. of deposits from smaller banks.
The MBCA also reportedly noted that this action would “stabilize” the banking industry and significantly reduce the likelihood of “more bank failures.”
It added that the MBCA proposed that the insurance program be funded by the banks themselves, increasing the deposit insurance rating for lenders who choose to participate in the increased coverage.
Related: Marathon Digital: Deposits at Signature Bank are safe and available
John Deaton, founder of legal news outlet Crypto Law Lawyer, predicted in a March 19 tweet to his 250,000 followers that up to 300 banks could go out of business if the FDIC doesn’t provide a guarantee.
This comes after a recent analysis by economists, published on March 13, exposed the large number of banks at risk from uninsured deposit withdrawals.
The report revealed that “even if only half of uninsured depositors” decide to withdraw, “nearly 190 banks are at potential risk” of insured depositor impairment, with “potentially $300 billion of insured depositors at risk.”
Meanwhile, Tom Emmer, the majority whip of the United States House of Representatives, stated in a March 15 letter to FDIC Chairman Martin Gruenberg, questioning reports he received that the FDIC is “weaponizing recent instability” in the banking sector to “clean up legal crypto”. activity” from the US
Emmer stated that these actions are “deeply inappropriate” and could lead to “wider financial instability”.
In addition, on March 13, the Federal Reserve announced that its vice chairman of oversight, Michael Barr, is “leading a review of Silicon Valley Bank’s oversight and regulation” in light of its failure, with a review scheduled for public publication. by May 1.