Warren says he favors raising the FDIC’s deposit insurance cap

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(Bloomberg) — Senator Elizabeth Warren said she supports raising the Federal Deposit Insurance Corp.’s standard $250,000 cap to potentially millions of dollars, after the Silicon Valley bank failure exposed risks in U.S. regional banks.

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“I think lifting the FDIC insurance cap is a good step,” Warren, a Democrat from Massachusetts who is a member of the Senate Banking Committee, said in a CBS News interview on Sunday. “Now the question is where are the right numbers when it comes to raising it.”

“It’s a question we have to work through. Is it 2 million, is it 5 million, is it 10 million?” she said on “Face the Nation”.

Other lawmakers cautioned, partly reflecting the challenge of passing legislation in a divided Congress.

“Well, this is the first time I’ve heard a proposal like this,” Patrick McHenry, a North Carolina Republican who chairs the House Committee, told CBS. “And I haven’t had a single conversation with the White House or the administration about changing the level of deposit insurance.”

Warren, who has long been a champion of tighter regulation, stepped up her criticism of Federal Reserve Chairman Jerome Powell on Sunday shows, telling CBS, NBC’s “Meet the Press” and ABC’s “This Week” that he Took “Flamthrower” for the rules.

Warren said on “This Week” that banks with at least $50 billion in assets should not be eligible for the regulatory relief granted to smaller community banks.

He declined to say whether President Joe Biden’s administration is actively seeking support for raising the FDIC’s limits on deposit insurance. “I don’t want to talk about private talks, but I would say it’s one of the options that is on the table right now,” Warren told CBS.

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Senator Mike Rounds, a Republican on the banking committee, suggested that lawmakers may need to reconsider the $250,000 deposit insurance level. “Maybe it’s not enough,” he said on NBC on Sunday. “Should we bump into him?”

Senator Chris Van Hollen, a Democrat from Maryland, echoed the Biden administration’s stance that bank investors would not be bailed out without explicitly changing the FDIC umbrella.

On “Fox News Sunday,” he said, “We’re not going to bail out any banks.” “One question going forward will be how we deal with deposits in excess of the $250,000 covered here. But if we do, what the mechanism is is debatable.”

Warren has been at the forefront of critics blaming the Fed, regulators and former President Donald Trump for laying the groundwork for the crisis that toppled Silicon Valley banks and Signature Bank of New York and helped stabilize a cluster of large firms. pledged $30 billion for First Republic Bank.

Asked on CBS whether she trusted Fed President Mary Daly after SVB fell into federal receivership, Warren said: “No, I don’t,” adding that Powell and the Fed were “ultimately responsible”.

“We need accountability for our regulators who clearly fell on the job, and that starts with Jerome Powell,” Warren said.

He also called for accountability for bank executives, including sanctions for former SVB chief executive Gary Baker and lifetime financial industry executives who were in charge of banks that failed.

– With assistance from Anna Edgerton and Ian Fisher.

( with comments from other MPs starting in fifth paragraph, Warren’s ‘flamethrower’ comment in sixth.)

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