Midsize US Banks Ask FDIC to Extend Insurance on All Deposits for the Next Two Years

When it comes to the financial crisis, the banks in the USA are taking some lessons from historical occurrences. The governments and Central Banks are not the only institutions that are taking measures to prevent such cataclysmic events.

Private banking enterprises have also started to respond to distress calls. To this end, the banking coalition of the country has reported that it is in the process of making deals that such events can be avoided at all costs.

Therefore, these banking groups have decided that they will apply for emergency insurance. Media has reported that the Mid-sized banking coalition or MBCA has decided to approach the FDIC to make a new deal.

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This deal entails applying for comprehensive insurance coverage for all their deposits for the duration of the next two years. Such a deal would protect all the deposits of these mid-sized banks and prevent any type of massive wave of losses in case of unexpected bank runs.

MBCA is Working with the Government to Stabilize the Banking Sector

At present, the stocks of most banking enterprises in the USA are trading in the red. Therefore, MBCA has issued a statement claiming that these preventive measures are going to stabilize the banking sector in the country.

At the same time, the coalition noted when such preventive measures are in place; they will also work as a buffer against any unexpected decline in the financial enterprise. The group also confirmed it is going to set aside a fund that will assist and support any member that has been struggling.

However, the FDIC will be able to evaluate and invite the banks that can participate in the program in addition to any banking enterprises that fulfill the eligibility criteria. Speaking on the matter, John Deaton has claimed that there is a possibility of more than 300 US banking getting axed if FDIC fails to grant them some type of insurance or warranty coverage.

Meanwhile, some economic studies suggest that at many present, banks are under threat of facing bankruptcy.

Some reports have suggested that in case only 50% of uninsured depositors opt out of their funds, their banks can go under. This report has nominated a list of 190 banks that can face such an existential threat.

This report has also suggested that currently, $30 billion worth of insured deposits are under threat of becoming active claims.

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On the other hand, Tom Emmer, the majority house whip, has rejected the idea that FDIC has been staging these banking crises as a way to contain crypto trading. He claimed that such ideas are preposterous and may lead to the biggest financial annihilation that goes against the interest of everyone involved.

On the other hand, Federal Reserve has formed a review committee under the supervision of vice chair Michael Barr to investigate the failure of Silicon Valley Bank.