Warren says Congress should raise FDIC insurance cap
Sen. Elizabeth Warren (D-Mass.) said during an interview on Sunday that Congress should lift the cap on federal insurance on bank deposits from $250,000, as lawmakers mull policy changes in the aftermath of the historic collapse of Silicon Valley Bank.
“I think that lifting the FDIC insurance cap is a good move,” Warren said on CBS’s “Face The Nation,” referring to the Federal Deposit Insurance Corporation. “Now the question is, where’s the right number on lifting?
"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 that is now being called into question after the federal government decided to backstop all uninsured deposits at Silicon Valley Bank.
Federal regulators moved to add a safety net to all deposits at the bank in an effort to contain a wider economic fallout from the bank’s collapse. It was paid for by a federal insurance fund that is regularly paid into by banks, but has lawmakers questioning whether the $250,000 level of insurance is enough.
Warren has taken aim at banking regulators for allowing the factors that precipitated the fall of Silicon Valley Bank, arguing that the systematic weakening of regulations over the last half decade ultimately resulted in the bank’s collapse. She said on Sunday lifting the FDIC insurance cap would be placing even more responsibility on federal banking regulators, who she says were asleep at the wheel.
“We have to do this because these banks are under regulated,” Warren said on CBS. “And if we lift the cap, we are relying even more heavily on the regulators to do their jobs.”
Some Republicans have pounced on the Biden administration’s move to backstop all deposits at Silicon Valley Bank, describing it as a bailout of bank executives and wealthy depositors. But Warren said the federal insurance is meant to make sure small businesses are confident that they will always be able to access their money to meet basic expenses, among other goals.
“Small businesses need to be able to count on getting their money to make payroll, to pay the utility bills,” Warren said. “Nonprofits need to be able to do that. These are not folks who can investigate the safety and soundness of their individual banks.”