US banks ask authorities to protect all deposits

A coalition of medium-sized US banks, fearful of their customers fleeing the crisis of confidence in US banks, is asking the Fed to cover their deposits above the legal ceiling.

By Le Figaro with AFP


This content is not accessible.

The recent failures of Silicon Valley Bank and Signature Bank are causing a crisis of confidence in the banking sector. GIVEN RUVIC/REUTERS

A coalition of mid-sized US banks has asked federal regulators to guarantee all their customers’ deposits for two years, even above the usual $250,000 limit, to avoid a contagion phenomenon following the bankruptcy of the SVB bank, according to Bloomberg .

This measure “immediately stop the exodus of customers from smaller banks, stabilize the banking sector and significantly reduce the risk of further bankruptciesthe Mid-Size Bank Coalition of America argued in a letter addressed to authorities, according to an article published by the news agency on Saturday. The recent failures of Silicon Valley Bank and Signature Bank are causing a crisis of confidence in the sector.

This content is not accessible.

Many clients of similar banks took their money and deposited it with larger banks, such as JPMorgan Chase or Bank of America, which were deemed too big for the state not to rescue them in a crisis. Currently, deposits in the United States are protected by the banking regulator, the FDIC, up to $250,000.

READ ALSO – What is the “bank run”, this threat that scares the banks?

Bank First Republic, which mainly serves wealthy clients, saw its stock market valuation fall by 80% this week. Based in San Francisco, it is the 14th largest US bank by assets. “Regardless of the general health of the banking sector, confidence has eroded in all but the largest banks.the coalition said, according to Bloomberg. In particular, it calls on the FDIC, the Federal Reserve (Fed) and Secretary of the Economy Janet Yellen to “restore confidence».

The group of banks proposes to self-fund this measure by increasing the amount of contributions they already pay to the FDIC to guarantee the deposits. On Thursday, eleven major US banks pledged to deposit a total of $30 billion into First Republic accounts. Bank of America, Citigroup, JPMorgan Chase and eight other institutions hope their “confidence in the banking systemof the country, according to a joint press release.

Leave a comment