A US midsize banking group has guaranteed all customer deposits to federal regulators for two years above the normal limit of $250,000 to avoid a contagion after the failure of SVB Bank, according to Bloomberg. requested to do so. agency.
In a letter to regulators, the Association of Midsize Banks said the move would “immediately stop the outflow of customers from smaller banks, stabilize the banking sector, and significantly reduce the risk of further failures.” intelligence agency.
The recent bankruptcies of Silicon Valley Banks and Signature Banks have sparked a crisis of confidence in the sector.
Customers of similar banks often withdraw their funds and deposit them with large banks such as JP Morgan Chase and Bank of America. These banks are considered too important for the state to bail out in the event of a crisis.
US deposits are currently insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC), the banking regulator.
First Republic Bank’s stock has fallen 80% this week. Headquartered in San Francisco, it is his 14th largest bank in the United States by asset size.
“Confidence is declining in all but the largest banks, regardless of the overall health of the banking industry,” the coalition said, according to Bloomberg.
The group urged the FDIC, the Federal Reserve (Fed), and Treasury Secretary Janet Yellen to “restore confidence.”
Banking groups are proposing to fund this action by increasing contributions to the FDIC to insure deposits.
On Thursday, 11 major US banks pledged to deposit a total of $30 billion into First Republic accounts.
Bank of America, Citigroup, JPMorgan Chase and eight other institutions want to show “trust in the banking system,” according to a joint statement.
AFP was unable to immediately contact coalition forces and authorities.