(Bloomberg) — Sen. Elizabeth Warren said she favors lifting the Federal Deposit Insurance Corp.’s $250,000 default limit, possibly in the millions of dollars, after the bankruptcy of Silicon Valley Bank exposed risks in US regional banks.
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“I think lifting the FDIC insurance limit is a good move,” Warren, a Massachusetts Democrat who serves on the Senate Banking Committee, said in a CBS News interview on Sunday. “Now the question is, where is the right number to lift it.”
“This is a question we need to solve. Is it 2 million, is it 5 million, is it 10 million?” she said on “Face the Nation.”
Other legislators were cautious, due in part to the challenge of passing legislation in a divided Congress.
“Well, it’s the first time I’ve heard such a proposal,” Patrick McHenry, chairman of the House Financial Services Committee, a North Carolina Republican, told CBS. “And I haven’t had any conversations with the White House or the administration about deposit insurance, changing the levels.”
Warren, a longtime proponent of stricter regulation, reinforced her criticism of Federal Reserve Chairman Jerome Powell on the Sunday shows by telling CBS, NBC’s “Meet the Press” and ABC’s “This Week” that he was “a flamethrower” for banking regulations.
Banks with assets of at least $50 billion should not qualify for regulatory relief offered to smaller community banks, Warren said in “This Week.”
She declined to say whether President Joe Biden’s administration is actively trying to build support for raising the FDIC’s ceiling on deposit insurance. “I don’t want to talk about private conversations, but I will say it has to be one of the options on the table right now,” Warren told CBS.
Senator Mike Rounds, a Republican on the banking committee, suggested lawmakers should reconsider the level of the $250,000 deposit guarantee. “Maybe that’s not enough,” he said on NBC on Sunday. “Should we kick that up?”
Sen. Chris Van Hollen, a Democrat from Maryland, reiterated the Biden administration’s position that bank investors will not be released without explicitly supporting a change to the FDIC umbrella.
“We’re not going to bail out banks,” he said on “Fox News Sunday.” “There will be a question in the future about how we handle deposits over $250,000 that are covered here. But what the mechanism would be if we did at all is up for debate.
Warren was at the forefront of critics who blamed the Fed, regulators and former President Donald Trump for laying the groundwork for a crisis that toppled Silicon Valley Bank and New York’s Signature Bank and drove a group of larger companies to raise $30 billion. dollar pledge to help stabilize Bank of the First Republic.
Asked on CBS if she has faith in San Francisco Fed President Mary Daly after SVB went into receivership, Warren said, “No, I don’t,” while saying that Powell and the Fed were “ultimately responsible.”
“We need accountability from our regulators, who have clearly fallen on the job, and that starts with Jerome Powell,” said Warren.
She also called for accountability for bank executives, including recoveries from former SVB chief executive Gary Becker and lifelong financial industry bans for executives in charge of banks that failed.
–With help from Anna Edgerton and Ian Fisher.
(Updates with comments from other legislators from the fifth paragraph, Warren’s “flamthrower” remark in the sixth.)
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