Sen. Elizabeth Warren (D-Mass.) said during an interview Sunday that Congress should remove the $250,000 federal insurance cap on bank deposits as lawmakers ponder policy changes following the historic collapse of the Silicon Valley bank.
“I think removing the FDIC insurance cap is a good move,” Warren said on CBS’s “Face The Nation,” referring to the Federal Deposit Insurance Corporation. “The question now is, where is the right number in the lift?
“Is it $2 million? Is it $5 million? Is it $10 million?”
The FDIC currently insures deposits of up to $250,000 for each customer, a level now in question after the federal government decided to insure all uninsured deposits at Silicon Valley Bank.
Federal regulators have decided to add a safety net to all deposits at the bank to contain further economic fallout from the bank’s collapse. It was paid for by a federal insurance fund that banks regularly pay into, but lawmakers wonder if the $250,000 sum insured is enough.
Warren has targeted banking regulators for allowing the factors that hastened the fall of Silicon Valley Bank, arguing that the systematic weakening of regulations over the past half decade ultimately led to the bank’s collapse. She said Sunday removing the FDIC insurance cap would place even more responsibility on federal bank regulators who she says were sleeping at the wheel.
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“We have to do this because these banks are under-regulated,” Warren said on CBS. “And if we raise the cap, we’re going to rely even more on regulators to do their job.”
Some Republicans have pounced on the Biden administration’s move to halt all deposits at Silicon Valley Bank, calling it a bailout for bank executives and wealthy depositors. But Warren said federal insurance is designed to ensure small businesses can rest assured they can always access their money to cover basic expenses, among other things.
“Small businesses need to be confident that they’re getting money to pay their payroll and utility bills,” Warren said. “Nonprofit organizations need to be able to do that. These are not people who can examine the safety and soundness of their individual banks.”
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