Warren says proposal to remove FDIC insurance cap “should be on table now”

Washington — Senator Elizabeth Warren of Massachusetts said Sunday that a Congressional proposal to make the Federal Deposit Insurance Corporation’s (FDIC) insurance ceiling of the current limit of $250,000 is an option that “should be on the table now” as lawmakers debate how to respond to the rapid collapse of two banks earlier this month.

“I think lifting the FDIC insurance limit is a good move,” Warren said in an interview with “Face the Nation.” “Now the question is where is the right number for lifting? But recognize that we need to do this, because these banks are under-regulated, and if we lift the cap, we demand – or even more strongly rely on regulators to do their jobs .”

The Democratic senator said the main question for Congress is where to set the insurance cap on FDIC deposits.

“Is it $2 million? Is it $5 million? Is it 10 million?” she said. “Small businesses should be able to count on getting their money to pay the payroll, to pay the utility bills. Nonprofits should be able to do that. These are not people who can scrutinize the safety and soundness of their individual banks. work that the regulators have to do.”

Senator Elizabeth Warren on ‘Face the Nation’, March 19, 2023.

Warren declined to say whether she is speaking with the White House about a plan to raise FDIC insurance levels above the $250,000 cap, but said “it’s one of the options that should be on the table now.”

The abrupt closure of Silicon Valley Bank on March 10, followed by the collapse of Signature Bank of New York days later, federal banking regulators hurriedly sent out a plan to strengthen the banking system and reassure Americans that they can have faith in the financial system.

As part of emergency measures of the Biden administration was to ensure that all depositors with accounts at Silicon Valley Bank would have access to all of their money. The Federal Reserve has also created a new loan facility to help financial institutions meet the needs of depositors.

But the collapse of the two banks has brought a new scrutiny from top banking regulators, including Federal Reserve Chairman Jerome Powell.

Warren said on Sunday that regulators and the executives of these banks should be held accountable, particularly criticizing the Fed and Powell, who she says is a “dangerous man to have in this position.”

“We need accountability from our regulators who have clearly fallen on the job, starting with Jerome Powell, and we need accountability from the executives of these major financial institutions,” Warren said. “Look, there should be chargebacks for Gary Becker and the others who blow these banks.”

The Massachusetts senator also said he does not trust Mary Daly, the president of the San Francisco Fed, as public revelations as early as December indicated problems with Silicon Valley Bank.

“The Fed should have acted, but the San Francisco Fed and the Federal Reserve Bank,” she said. “Remember, the Federal Reserve Bank and Jerome Powell are ultimately responsible for overseeing and overseeing these banks. And they’ve made it clear that their job is to ease the regulatory burden on these banks. We’ve now seen the consequences.”

Warren said Powell needs to “turn 180 degrees and monitor these banks more closely,” and Congress is tightening banking rules.

“This whole tranche of banks has been underregulated for five years now. And people are very concerned about what’s under the hood when you lift the hood, as the regulators clearly don’t know their job,” she said. “It’s why I’m now calling for changes in the Fed’s regulatory approach, and changes in Congress so that we’ve reversed authorization to ease those regulations.”

Warren on Sunday separately called for an independent investigation into the bank and regulatory deficiencies, and requested that the Treasury Inspectors General, the FDIC and the Federal Reserve provide a preliminary report to Congress within 30 days.





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