Earlier this month, as Silicon Valley Bank and Signature Bank failed in rapid succession, federal regulators took the extraordinary measure of waiving the Federal Deposit Insurance Corporation (FDIC) deposit insurance limit of $250,000 for those two institutions. Citing a “systemic risk exception,” the move protected uninsured depositors–but only at these two banks. Absent a more permanent policy change, many depositors fear that their money won’t be guaranteed unless it’s in a large, “systemically important” bank.
In order to restore confidence in the banking system and stem the dangerous outflow from regional and community banks, Congress must act now to raise the FDIC insurance limit to $10 million. This threshold would provide meaningful protection to small and medium-sized businesses and ensure a solid base of deposits that aren’t susceptible to bank runs.
