Financial regulators’ actions in taking over banks on opposite sides of the country unleashed widespread discussion, including on Capitol Hill, about the core part of the rescue: guaranteeing all the deposits, including those above the $250,000 cap set by federal insurance.
Lawmakers mostly endorsed the regulators’ moves to protect all deposits at Silicon Valley Bank in Santa Clara, Calif., and Signature Bank in New York, but they have also tentatively started to discuss ways to avoid sending a message that depositors above the federal cap don’t have to worry about their money.
Interviews with lawmakers on both sides of the aisle found some worried that banks and depositors would conclude all deposits will be guaranteed by the federal government, removing a risk that should weigh in their decisions. Others feared customers at small and midsize banks would hear the opposite message and move their money to the two or three biggest banks considered “too big to fail.”
