The Coalition of Mid-Size Banks of America (MBCA) has reportedly asked United States federal regulators to extend insurance on all deposits over the next two years.
According to a March 18 Bloomberg report, MBCA – a coalition of US midsize banks – sent a letter to the US Federal Deposit Insurance Corporation (FDIC), asserting that expanding insurance on “all deposits” would “stop the exodus immediately.” deposits from smaller banks.
MBCA also reportedly noted that this action would “stabilize” the banking industry and significantly reduce the likelihood of “more bank failures”.
It added that MBCA proposed that the insurance program be self-funded, by increasing deposit insurance ratings on lenders who choose to participate in increased coverage.
Related: Marathon Digital: Deposits kept at Signature Bank are safe and available
John Deaton, founder of legal news outlet Crypto Lawyer, estimated in a March 19 tweet to his 250,000 followers that up to 300 banks could go bankrupt if the FDIC fails to provide guarantees.
This comes after a recent analysis by economists, released on March 13, revealed a significant number of banks are at risk from withdrawing uninsured deposits.
The report revealed that “even if only half of uninsured depositors” decide to withdraw, “nearly 190 banks are at potential risk” of insured depositor decline, with “a potential $300 billion of insured depositors are at risk.”
Meanwhile, Tom Emmer, a majority whip in the United States House of Representatives, stated in a March 15 letter to FDIC chairman Martin Gruenberg, questioning reports he received that the FDIC was “weaponizing the recent instability” in the banking sector to “clean up legal crypto activity.” from the US
Emmer stated that these actions were “grossly inappropriate” and could lead to “widespread financial instability”.
Furthermore, the Federal Reserve announced on March 13 that its Deputy Chair of Supervision, Michael Barr, is “leading a review of supervision and regulation” of Silicon Valley Bank, in “in light of its failures,” with the review set for public release before May 1.