UNITED STATES NEWS

FDIC recommends overhauling US insurance deposit system

May 1, 2023, 11:06 AM | Updated: 11:38 am

NEW YORK (AP) — The Federal Deposit Insurance Corp. is recommending the U.S. rethink its decades-old policy of insuring up to $250,000 in bank deposits and replace it with an overhaul that would allow regulators to cover higher amounts on a “targeted” basis.

The proposed change appears to openly acknowledge that the FDIC is looking for ways to calm both depositors and markets as the organization contends with the third U.S. bank failure this year. First Republic Bank became the second largest failure in history Monday when regulators seized it and JP Morgan Chase stepped up as a buyer.

“The recent failures of Silicon Valley Bank and Signature Bank, and the decision to approve Systemic Risk Exceptions to protect the uninsured depositors at those institutions, raised fundamental questions about the role of deposit insurance in the United States banking system,” FDIC Chairman Martin J. Gruenberg said in a statement Monday accompanying the regulator’s recommendations.

The FDIC is a government agency formed during the Great Depression to restore faith in U.S. banking institutions

Under the proposal, the FDIC would offer business account coverage a higher levels than ordinary consumer deposits receive, the FDIC said.

As of December, more than 99% of U.S. deposit accounts held less than $250,000, and so were automatically covered by existing FDIC insurance, Gruenberg said.

However, the system remains subject to the sort of bank runs that brought down First Republic, despite a consortium of big lenders having pooled $30 billion in cash to shore up the bank as recently as March.

Last Monday, First Republic reported its first-quarter results, shocking investors when it revealed that depositors had withdrawn $100 billion, most in mid-March immediately after Silicon Valley Bank and Signature Bank failed. First Republic’s stock plunged more than 50% the day after the report.

United States News

Associated Press

Three little piggies at a yoga class = maximum happiness

SPENCER, Mass. (AP) — Three little piggies went to a yoga class. Their human companions had a blast. Wilbur, Charlotte and Bluey fit right into a growing trend of yoga with animals, adding some fun to the usual physical and mental wellness exercises at a class in central Massachusetts. Darting and strolling among the yoginis […]

7 hours ago

Associated Press

Remember last year’s Memorial Day travel jams? Chances are they will be much worse this year

You didn’t think summer travel would be easy, did you? Highways and airports are likely to be jammed the next few days as Americans head out for Memorial Day weekend getaways and then return home. AAA predicts this will be the busiest start-of-summer weekend in nearly 20 years, with 43.8 million people expected to travel […]

7 hours ago

Associated Press

5 dead and nearly 3 dozen hurt in tornadoes that tore through Iowa, officials say

GREENFIELD, Iowa (AP) — A deadly tornado that wreaked havoc in the small city of Greenfield, Iowa, left four people dead and nearly three dozen injured, officials said, while a fifth person was killed elsewhere. The twister that tore through the city on Tuesday was rated at least an EF-3 by the National Weather Service […]

8 hours ago

Associated Press

Thousands of journalists have fled homelands due to repression, threats and conflict, UN expert says

UNITED NATIONS (AP) — Thousands of journalists have fled their home countries in recent years to escape political repression, save their lives and escape conflict – but in exile they are often vulnerable to physical, digital and legal threats, a U.N. investigator said Wednesday. Irene Khan said in a report to the U.N. General Assembly […]

8 hours ago

Javier Cazares, center, stands with families of the victims in the Uvalde elementary school shootin...

Associated Press

Families of Uvalde school shooting victims file $500 million federal lawsuit against Texas state police

The families of the victims in the Uvalde school shooting in Texas filed a $500 million federal lawsuit against 92 state police officers.

10 hours ago

Javier Cazares, center, stands with families of the victims in the Uvalde elementary school shootin...

Sponsored Content by

The families of the victims in the Uvalde school shooting in Texas filed a $500 million federal lawsuit against 92 state police officers.

Sponsored Articles

...

Collins Comfort Masters

Here’s how to be worry-free when your A/C goes out in the middle of summer

PHOENIX -- As Arizona approaches another hot summer, Phoenix residents are likely to spend more time indoors.

...

COLLINS COMFORT MASTERS

Here are 5 things Arizona residents need to know about their HVAC system

It's warming back up in the Valley, which means it's time to think about your air conditioning system's preparedness for summer.

...

Midwestern University

Midwestern University Clinics: transforming health care in the valley

Midwestern University, long a fixture of comprehensive health care education in the West Valley, is also a recognized leader in community health care.

FDIC recommends overhauling US insurance deposit system