US Banks want Guaranteed Deposits and more than 250,000 Dollars to avoid a Contagion of Bankruptcies
A group of mid-sized US banks has called on US federal regulators to guarantee all their customers' deposits for 2 years, even if they are above the guaranteed deposit limit of up to 250,000 dollars. The aim is to avoid the "phenomenon of contagion" after the bankruptcy of Silicon Valley Bank (SVB), reports "Bloomberg", quoted by AFP and BTA.
"This measure will immediately stop the outflow of customers of the smallest banks, stabilize the banking sector and greatly reduce the risks of other bankruptcies," said the appeal addressed to the regulatory authorities by the mid-sized banks of America.
The bankruptcies of SVB and Signature Bank created a crisis of confidence in the banking sector. Many peer bank customers withdrew their money to deposit it in larger banks, such as JPMorgan Chase and Bank of America, seen as too big to be bailed out by the state in the event of a crisis.
During the week, First Republic Bank, which mainly serves wealthy clients, experienced a collapse of shares on the stock exchange by 80 percent. Based in San Francisco, it is the 14th largest in the US by assets. On Thursday, 11 major banks committed to deposit billion into First Republic Bank's accounts
"Whatever the overall state of the banking industry, confidence has been undermined for all but the largest banks," the coalition of mid-sized banks wrote in the letter. They are calling on the banking regulator, the Federal Reserve Board and Treasury Secretary Janet Yellen to restore confidence. The group of banks is proposing to finance the aforementioned measure by increasing the contributions it already pays to the banking regulator to guarantee deposits.
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