Silicon Valley Bank headquarters in Santa Clara, California, on March 13, 2023.
Noah Berger AFP Getty Images
A coalition of midsize US banks, the Mid-Size Bank Coalition of America (MBCA), has asked the regulator to extend FDIC insurance to all deposits for the next two years, Bloomberg News reported on Friday citing a letter from the MBCA to the regulator.
The letter stated that extending the insurance would immediately stop the exodus of deposits from small banks, which would stabilize the banking sector and restore confidence in the banking system, the report said.
The collapse of Silicon Valley Bank, which holds a high number of uninsured deposits beyond the FDIC guaranteed limit, prompted customers to move their money to larger banks and triggered a sharp selloff in banking stocks.
According to a Bloomberg report, the group proposed that the expanded insurance program would be paid for by the banks by increasing the insurance-deposit assessment for borrowers who choose to participate in the increased coverage.
The FDIC did not immediately respond to a Reuters request for comment while the MBCA could not immediately be reached.