Rep. Maxine Waters of California, the top Democrat on the House Financial Services Committee, said Wednesday that Congress should consider raising the limit on the amount of money in bank deposits that the Federal Deposit Insurance Corporation can cover.
“When you have something like Silicon Valley Bank with more than 90 percent of its depositors uninsured, do we increase the amount of insurance that the banks will pay to have a bigger insurance pool, or do we stay the way we are and take it? on a one-by-one basis?” Ms. Waters said in an interview.
The FDIC insures deposits up to $250,000—the net amount for individuals, but only a fraction of the balances companies can hold. When a Silicon Valley bank collapsed last week, many businesses that weren’t able to get their money out earlier were left stranded.
This raised concerns that businesses on the bank’s client list – which was heavily skewed towards start-ups – would not be able to pay vendors or staff. But the regulators intervened at the weekend, saying that all the bank’s deposits would be protected.
Ms. Waters said the deposit insurance issue is one of several that lawmakers should address in the wake of the collapse of Silicon Valley Bank and Signature Bank, which regulators took over on Sunday.
Lawmakers should also review the 2018 repeal of mid-sized bank regulations to determine whether easing stress-testing requirements for banks the size of Silicon Valley Bank was the right idea or contributed to the bank’s collapse, she added.
Ms. Waters also said that when considering who to sell the remnants of Silicon Valley Bank, regulators should avoid deals that would make the biggest banks even bigger.
“I’m not that interested in mergers,” Ms. Waters said. “I don’t want this country to become a country where we only rely on four or five big banks.”