December 6, 2023

US lawmakers to consider raising FDIC bank deposit insurance limits, Reuters reports

By David Lauder

WASHINGTON (Reuters) – Three key U.S. banking-related lawmakers said on Sunday they would consider requiring a higher federal insurance limit on bank deposits to stave off a financial crisis marked by the withdrawal of large uninsured deposits from small and regional banks.

“I think raising the FDIC insurance limit is a good move,” Democratic Senator Elizabeth Warren said on CBS’ “Face The Nation,” noting that the current limit for an FDIC depositor is $250,000.

Asked what the new top level should be, Warren, a member of the Senate Banking Committee, said: “That’s a question we have to look at. Is it $2 million, $5 million? $10 million? Small businesses need power. Getting your cash to pay employees and pay bills for essential services. Count”.

Warren declined to discuss conversations she’s had with the Biden administration about such a move, but said increasing the insurance limit is “one of the options that should be on the table right now.”

Republican Rep. Patrick McHenry, chairman of the House Financial Services Committee, said he would address the adequacy of the FDIC’s deposit insurance, but said he had not discussed raising the limit with Biden administration officials.

“What I will do is, through legislation and the oversight process, the FDIC will decide whether or not we need to look at deposit levels,” McHenry said on the same CBS program.

During the financial crisis that erupted in 2008, the FDIC raised the deposit limit from $100,000 to $250,000, and temporarily backed all deposits to protect smaller banks.

(Reporting by David Lauder)