US banks ask authorities to protect all deposits

A group of medium-sized banks of USA asked the federal regulatory authority to guarantee for two years all the deposits of its clients, even above the usual limit of 250,000 dollars, to avoid a contagion phenomenon after the bankruptcy of the SVB bank, reported the Bloomberg agency.

This measure “It would immediately stop the exodus of customers from smaller banks, stabilize the banking sector and greatly reduce the risk of further bankruptcies,” argued the Mid-Size Bank Coalition of America in a letter to the authorities, the economic information agency said on Saturday.

Look: Large financial entities in the US inject US$30 billion into the First Republic Bank

The recent bankruptcies of Silicon Valley Bank and Signature Bank are causing a crisis of confidence in the sector.

Many customers of similar banks have withdrawn their money to deposit it in larger banks, such as JPMorgan Chase or Bank of America, considered too important for the state not to bail them out in the event of a crisis.

Actually in USA Deposits are protected by the banking regulator, the Federal Deposit Insurance Corporation (FDIC), up to a maximum amount of $250,000.

The market value of the bank First Republic fell this week 80%. Headquartered in San Francisco, it is the fourteenth largest bank in the United States by volume of assets.

“Regardless of the general health of the banking industry, there is an erosion of confidence in all but the largest banks,” the coalition said, according to Bloomberg.

The group urged the FDIC, the Federal Reserve (Fed, central bank) and Treasury Secretary Janet Yellen to “restore confidence.”

The group of banks proposes to finance this measure by increasing the amount of contributions they pay to the FDIC to guarantee deposits.

On Thursday, 11 major US banks pledged to deposit a total of $30 billion in First Republic accounts.

Bank of America, Citigroup, JPMorgan Chase and eight other institutions hope to show their “confidence in the banking system” in the country, according to a joint statement.

The coalition and authorities could not immediately be reached by AFP.

Source: Elcomercio

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I am Jack Morton and I work in 24 News Recorder. I mostly cover world news and I have also authored 24 news recorder. I find this work highly interesting and it allows me to keep up with current events happening around the world.