(Bloomberg) — Senator Elizabeth Warren said she favors raising the Federal Deposit Insurance Corp.’s standard $250,000 cap, possibly to a million dollars, after the failure of a Silicon Valley bank exposed risks to U.S. regional banks.
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“I think raising the FDIC insurance cap is a good move,” Warren, a Democrat from Massachusetts who is a member of the Senate Banking Committee, said in an interview with CBS News on Sunday. “Now the question arises, where is the right number to raise it.”
“That’s a question we have to work through. Is it 2 million, is it 5 million, is it 10 million?” She said in ‘Face the Nation’.
Other lawmakers cautioned, reflecting the challenge of passing legislation in a divided Congress.
House Financial Services Committee Chairman Patrick McHenry, a North Carolina Republican, told CBS, “Well, that’s the first time I’ve heard of a proposal like that.” “And I have not once had a conversation with the White House or the administration about changing deposit insurance, levels.”
Warren, a longtime champion of tighter regulation, stepped up criticism of Federal Reserve Chairman Jerome Powell on Sunday’s show, telling CBS, NBC’s “Meet the Press” and ABC’s “This Week” that he had taken a “flamethrower” on banking regulations.
Banks with at least $50 billion in assets should not qualify for regulatory relief offered to small community banks, Warren said on “This Week.”
She declined to say whether President Joe Biden’s administration is actively seeking to build support for raising the FDIC’s ceiling on deposit insurance. “I don’t want to talk about private conversations, but I would 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 that lawmakers may need to reconsider the $250,000 deposit insurance threshold. “Maybe that’s not enough,” he said Sunday on NBC. “Should we top it up?”
Senator Chris Van Hollen, a Democrat from Maryland, echoed the Biden administration’s stance that bank investors would not be bailed out without explicitly supporting the change to the FDIC’s umbrella.
“We’re not going to bail out any bank,” he said on “Fox News Sunday.” “The question of how we deal with deposits over $250,000 as covered here will go forward. But what the mechanism will be if we do that is up for debate.
Warren has been at the forefront of critics who blame the Fed, regulators and former President Donald Trump for setting the stage for the crisis by bringing down Silicon Valley banks and New York’s Signature Bank, led by a group of large firms that promised $30 billion in stabilization aid. First Republic Bank.
Asked on CBS if he had faith in San Francisco Fed President Mary Daly after SVB fell into federal receivership, Warren said: “No, I don’t,” adding that Powell and the Fed were “ultimately responsible.”
“We need accountability for our regulators, who clearly fell on the job, and that starts with Jerome Powell,” Warren said.
She also called for accountability for bank executives, including lifetime financial industry bans for former SVB chief executive Gary Becker and executives in charge of failed banks.
– With assistance from Anna Edgerton and Ian Fisher.
(Updates with comments from other lawmakers beginning in fifth paragraph, Warren’s ‘flamethrower’ comment in sixth.)
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