The Mid-Size Bank Coalition of America (MBCA) has allegedly urged US federal authorities to extend deposit insurance for the next two years.
According to a March 18 Bloomberg story, the MBCA — a coalition of mid-size U.S. banks — wrote to the FDIC, claiming that extending protection to “all deposits” would “immediately halt the migration” of deposits from smaller banks.
According to the MBCA, this step will “stabilize” the banking market and greatly reduce the possibilities of “further bank failures.”
The MBCA proposed that banks fund the insurance scheme themselves by increasing the deposit-insurance assessment on lenders who choose to participate in the expanded coverage.
In a March 19 tweet to his 250,000 followers, John Deaton, publisher of legal news source Crypto Law Lawyer, stated that if the FDIC fails to provide “any assurance,” up to 300 banks could fall.
I bet 2-300 banks will go under if there isn’t some FDIC guarantee. And this crisis has NOTHING to do with Crypto. https://t.co/JPRjXEwVVW
— John E Deaton (@JohnEDeaton1) March 18, 2023
This comes after a recent analysis by economists, published on March 13, revealed a large number of banks are at risk from uninsured deposit withdrawals.
The report revealed that “even if only half of uninsured depositors” decided to withdraw, “almost 190 banks are at a potential risk” of impairment to insured depositors, with “potentially $300 billion of insured depositors at risk.”
Meanwhile, Representative Tom Emmer, the majority whip in the United States House of Representatives, questioned reports that the FDIC is “weaponizing recent instability” in the banking sector to “purge legal crypto activity” from the U.S. in a March 15 letter to FDIC chair Martin Gruenberg,
Emmer warned that these actions are “deeply inappropriate” and could lead to “broader financial instability.”
Today, I sent a letter to FDIC Chairman Gruenberg regarding reports that the FDIC is weaponizing recent instability in the banking sector to purge legal crypto activity from the U.S. 👇 pic.twitter.com/fDmaA0XGWv
— Tom Emmer (@GOPMajorityWhip) March 15, 2023
Additionally, the United States Federal Reserve announced on March 13 that Michael Barr, the vice chair for Supervision, is “heading a review of the supervision and regulation” of Silicon Valley Bank in “light of its failure,” with the review due to be made public by May 1.