The FDIC and Fed are looking for ways the US government can guarantee all bank deposits of up to $17 trillion if the financial turmoil worsens.
the US government is consider methods To guarantee bank deposits if the current banking crisis worsens. As per reports, the Federal Deposit Insurance Corporation (FDIC) and federal Reserve All US banks are looking for possible guarantees for deposits. Officials from both parastatals initiated the scheme on the advice of a banking alliance, which deemed it necessary to avert a financial crisis.
This development could also mean that the FDIC and Federal Reserve are looking to guarantee the massive $17 trillion in deposits. Both independent government agencies say that taxpayers should not have to pay for the ongoing banking crisis. However, the feasibility of the proposed bank deposit guarantee scheme is yet to be proved.
Treasury Department officials are reviewing federal regulators’ emergency authorization to temporarily insure deposits that exceed the current cap. This limit is set at $250K and applies to most accounts. As it stands, the only way federal regulators can ensure deposits exceed $250,000 is with the formal consent of an extremely divided legislature.
US bank deposit guarantee seen as contingency measure
According to insiders, the authorities have not yet considered this step necessary. This is because the regulator moved earlier this month to assist banks in meeting withdrawal demands. The current agenda of guaranteeing bank deposits is a contingency measure if things get out of control.
White House spokesman Michael Kikukawa recently touched on the development. Without confirming or denying reports that a financial study is underway, Kikukawa explained:
“We will use the tools at our disposal to support community banks. Since our administration and regulators took decisive action late last week, we have seen deposits stabilize at regional banks across the country and, in some cases, The outflow has reversed marginally.
However, the government’s concern remains amid calls for more concerted intervention by medium-sized banks following the collapse of the three banks. This month alone, Silicon Valley Bank (SVB) and Signature Bank declared bankruptcy after unsuspecting depositors withdrew their money. In addition, a fourth bank, First Republic Bank, is struggling to stay afloat. Shares of First Republic plunged 47% on Monday, underscoring the stock’s decline of over 90% since March.
US Big Bank Coalition Leaves for First Republic Aid
However, as the beleaguered bank teeters on the brink, several large banks are looking to bail out First Republic. coalition of banking giants led by JP Morgan (NYSE: JPM) has promised to give 30 billion dollars To promote the San Francisco-based bank. Besides this, it is also a banking group make a standing plan To ensure that First Republic remained solvent and operational. The JPMorgan-led banking consortium provided some insight into its reasoning in a statement that read:
“This action by America’s largest banks reflects the confidence they place in First Republic and banks of all sizes, and it demonstrates their overall commitment to helping banks better serve their customers and communities.”
Elsewhere, analysts fear the banking crisis could trigger a suspension of rate hikes by the Federal Reserve.

Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to strip crypto stories down to the basics so that anyone anywhere can understand without a lot of background knowledge. When he is not delving deep into crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
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