FacebookTwitterLinkedInTelegramCopy LinkEmail
Regulation and Policy

U.S. Officials Study Ways to Expand Deposit Insurance Cap Amid Banking Crisis

U.S. Officials Study Ways to Expand Deposit Insurance Cap Amid Banking Crisis

The deposit insurance cap under the FDIC is $250,000, but recent banking collapses have started discussions about increase that amount.

Calls for increasing deposit insurance cap

Recent banking collapses have resulted in calls to increase the current deposit insurance cap under the Federal Deposit Insurance Corporation (FDIC) from $250,000.

The Mid-Size Bank Coalition of America has called for the cap to be lifted for the next two years, citing the need to protect depositors and prevent capital from being pulled from smaller banks.

Expanding the current deposit insurance beyond max cap

The current deposit insurance cap protects deposits up to $250,000, but the FDIC states domestic U.S. bank deposits totaled $17.7 trillion as of December 31.

According to Bloomberg, Treasury Department staff members are discussing expanding the current deposit insurance beyond the max cap to cover all deposits. However, the move ultimately depends on federal regulators’ level of emergency authority and whether the insurance cap can be increased without formal consent from Congress.

Drastic мove unnecessary at the moment

Bloomberg’s sources indicate that U.S. authorities do not currently see the need for such a drastic move, as recent steps taken by financial regulators are likely to be sufficient. The Federal Reserve rolled out the $25 billion Bank Term Funding Program on March 13 to stem any further contagion after Silvergate, Signature Bank, and Silicon Valley Bank went bust recently.

READ MORE: MicroStrategy’s Bitcoin Holdings Nearing Breakeven Point Amidst Crypto Rally

Federal government’s view on expanding FDIC insurance

White House Press Secretary Karine Jean-Pierre was recently asked if the federal government supported small- and mid-size banks’ push to expand FDIC insurance beyond $250,000. Jean-Pierre did not disclose the Biden Administration’s view but emphasized that the focus of the Treasury and the bank regulators was to create a fair playing field and ensure the financial system’s stability.

She also stated that recent actions taken by the government should give Americans confidence in their deposits, and the government would be there for them when needed.

Andrey Kunev

Reporter at CoinsPress

Andrey Kunev is a knowledgeable cryptocurrency content creator passionate about the crypto market. With extensive experience in market analysis and investment reporting, Andrey is a valuable asset to the CoinsPress team. As a frequent contributor, he offers insightful and comprehensive coverage of market trends, price fluctuations, and new advancements in cryptocurrency. Whether you're a seasoned investor or just getting started, Andrey's clear and concise writing offers a comprehensive look at the current state of the crypto market and its prospects. Stay up-to-date with CoinsPress's expert analysis and commentary on all things cryptocurrency.

Learn more about crypto and blockchain technology.