Elizabeth Warren calls for lifting FDIC insurance cap
Senator Elizabeth Warren said she favors lifting the Federal Deposit Insurance Corp.’s standard $250,000 cap, possibly into the millions of dollars, after Silicon Valley Bank’s failure exposed risk at US regional banks.
“I think that lifting the FDIC insurance cap is a good move,” Warren, a Democrat from Massachusetts who’s a member of the Senate Banking Committee, said in a CBS News interview on Sunday. “Now the question is, where is the right number on lifting it.”
“This is a question we’ve got to work through. Is it 2 million, is it 5 million, is it 10 million?” she said on “Face the Nation.”
Other lawmakers voiced caution, reflecting in part the challenge of passing legislation in a divided Congress.
“Well, it’s the first time I’ve heard a proposal like that,” House Financial Services Committee chair Patrick McHenry, a North Carolina Republican, told CBS. “And I have not had a single conversation with the White House or the administration about deposit insurance, changing the levels.”
Warren, long a champion of tighter regulation, amplified her criticism of Federal Reserve Chair Jerome Powell on the Sunday shows, telling CBS, NBC’s “Meet the Press” and ABC’s “This Week” that he “took a flamethrower” to banking regulations.
Banks with at least $50 billion in assets shouldn’t have qualified for regulatory relief offered to smaller 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 will say it’s got to be one of the options that’s on the table right now,” Warren told CBS.
Senator Mike Rounds, a Republican on the Banking Committee, suggested that lawmakers might need to reconsider the $250,000 deposit insurance level. “Perhaps that’s not enough,” he said on NBC on Sunday. “Should we bump that up?”
Senator Chris Van Hollen, a Democrat from Maryland, echoed the Biden administration’s stance that bank investors won’t be bailed without explicitly backing a change in the FDIC’s umbrella.
“We’re not going to bail out any banks,” he said on “Fox News Sunday.” “There will be a question going forward as to how we deal with deposits over $250,000 as being covered here. But what the mechanism would be if we do that at all is something very much up to debate.”
Warren has been at the forefront of critics blaming the Fed, regulators and former President Donald Trump for laying the groundwork for a crisis that took down Silicon Valley Bank and New York’s Signature Bank and led a group of bigger firms to pledge $30 billion to help stabilize First Republic Bank.
Asked on CBS whether she has confidence in San Francisco Fed President Mary Daly after SVB tumbled into federal receivership, Warren said: “No, I do not,” while saying Powell and the Fed were “ultimately responsible.”
“We need accountability for our regulators, who clearly fell down on the job, and that starts with Jerome Powell,” Warren said.
She also called for accountability for bank executives, including clawbacks from former SVB Chief Executive Officer Gary Becker and lifetime financial industry bans for executives who were in charge at banks that failed.
–With assistance from Anna Edgerton and Ian Fisher.