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Midsize Banking Alliance Seeks FDIC Insurance Coverage Expansion

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Midsize Banking Alliance Seeks FDIC Insurance Coverage Expansion

On March 20th, the US Midsize Banking Alliance sent a letter to the US Treasury, the Federal Deposit Insurance Corporation, the Office of the Comptroller of Currency, and the Federal Reserve, requesting that the insurance coverage of the Federal Deposit Insurance Corporation (FDIC) be extended to all deposits in the next two years, with the relevant costs borne by the banks themselves. In its letter, the organization stated that expanding insurance coverage could immediately prevent a significant outflow of deposits from smaller banks and prevent more bank closures. The organization said that the recent banking turmoil has caused people to lose confidence in all banks except large banks, and it is necessary to immediately restore market confidence in the entire banking system.

The US Midsize Banking Alliance requires the FDIC to provide two-year insurance for all deposits

Analysis based on this information:


The recent banking turmoil brought on by the pandemic has prompted the Midsize Banking Alliance to take action to restore the market confidence in the US banking system. In a letter addressed to the US Treasury, the Federal Deposit Insurance Corporation, the Office of the Comptroller of Currency, and the Federal Reserve, the alliance requested the expansion of insurance coverage of the Federal Deposit Insurance Corporation to all deposits made in the next two years, with the costs shouldered by the banks themselves.

According to the Midsize Banking Alliance, the expansion of the FDIC insurance coverage is crucial in preventing a significant outflow of deposits from smaller banks and preventing more bank closures. The recent banking turmoil has already caused people to lose confidence in all banks, except for large banks, making it necessary to take immediate action to restore market confidence in the entire banking system.

It is noteworthy that the FDIC provides deposit insurance aimed to protect depositors in case their bank fails. However, this insurance coverage only covers up to $250,000 per depositor, per account category, and per bank. The Midsize Banking Alliance’s request for insurance coverage expansion would mean that all deposits made by bank customers, regardless of the amount and account category, will be covered by the FDIC for the next two years.

Expanding the FDIC insurance coverage to all deposits will not only protect depositors but also benefit the banking industry as a whole. This expansion will prevent a significant outflow of deposits from smaller banks, thereby reducing the risk of bank closures, which can harm both banks and their customers. Smaller banks often serve the banking needs of local communities, small businesses, farmers and are essential to the economic stability of these areas.

In conclusion, the Midsize Banking Alliance’s request to expand FDIC insurance coverage to all deposits is a necessary step to restore market confidence in the entire banking system. By doing so, the banking industry can protect depositors, prevent bank closures, and ultimately, contribute to the economic stability of communities across the US.

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