Push to Insure Big Deposits Percolates on Capitol Hill

And on March 19, the Fed announced that it was making its regular operations to keep dollar financing flowing around the world more frequent, to try to prevent problems from extending to financial markets.

For now, the administration has stressed that it will use the tools it is already deploying to protect depositors and ensure a healthy regional and community banking system.

“We will use the tools we have to support community banks,” Michael Kikukawa, a White House spokesman, said Monday. “Since our administration and the regulators took decisive action last weekend, we have seen deposits stabilize at regional banks throughout the country and, in some cases, outflows have modestly reversed.”

The midsize Bank Coalition of America has urged federal regulators to extend F.D.I.C. insurance to all deposits for the next two years, saying in a letter late last week that it would halt an “exodus” of deposits from smaller banks.

“It would be prudent to take further action,” Mr. Khanna said.

Yet not even all banking groups agree that such a step is necessary.

Article source: https://www.nytimes.com/2023/03/21/business/economy/banks-insurance-deposit-cap.html