Sen. Elizabeth Warren (D-Mass.) said in an interview Sunday that Congress should lift the cap on federal insurance on bank deposits by $250,000 as lawmakers consider policy changes to the aftermath of the historic collapse of Silicon Valley Bank.
“I think lifting the FDIC insurance cap is a good move,” Warren said on CBS’ “Face The Nation,” referring to the Federal Deposit Insurance Corporation. “Now the question is, where is the right number for the lift?
“Is it $2 million? Is it $5 million? Is it $10 million?
The FDIC currently insures deposits of up to $250,000 for each customer, a level that is now in question after the federal government decided to back all uninsured deposits at Silicon Valley Bank.
Federal regulators moved to add a backstop to all of the bank’s deposits in an effort to contain the broader economic fallout from the bank’s collapse. He was paid for by a federal insurance fund regularly replenished by banks, but lawmakers question whether the $250,000 level of insurance is enough.
Warren took aim at banking regulators for allowing the factors that precipitated Silicon Valley Bank’s downfall, arguing that the systematic weakening of regulation over the past half-decade ultimately led to the bank’s collapse . She said Sunday that lifting the FDIC’s insurance cap would impose even more responsibility on federal banking regulators, who she said were asleep at the wheel.
“We have to do this because these banks are underregulated,” Warren said on CBS. “And if we lift the cap, we rely even more on regulators to do their job.”
Some Republicans jumped on the Biden administration’s decision to back all deposits at Silicon Valley Bank, describing it as a bailout of bank executives and wealthy depositors. But Warren said the federal insurance is meant to make sure small businesses are confident they’ll still be able to access their money to meet basic expenses, among other goals.
“Small businesses need to be able to rely on their money to make payrolls, to pay utility bills,” Warren said. “Nonprofit organizations need to be able to do that. These are not people who can investigate the safety and soundness of their individual banks.
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