US banks demand single action to protect Silicon Valley from bankruptcy contagion

US banks demand government action to protect Silicon Valley from bankruptcy contagion

The Association of Mid-Size American Banks has asked the Federal Banking Regulatory Commission to guarantee all its customers’ deposits for two years, even for amounts above the $250,000 threshold, to avoid an epidemic of Silicon Valley bankruptcies.

In a letter to officials from the Mid-sized Banks Alliance of America (MBCA), Bloomberg reported on Saturday that the move would “immediately stem the outflow of deposits from small banks, leading to stability in the banking sector and significantly reducing the likelihood of bank failures.”

The bankruptcy of Silicon Bank (SVB) and Signature Bank created a crisis of confidence in the sector.

Many customers of similarly sized banks have withdrawn their money and deposited it in large institutions like JP Morgan or Bank of America, which are too big for the government to ignore bailing out in the event of a collapse.

This week, the market value of First Republic Bank, which mainly serves high-net-worth clients, plunged 80% amid fears of a contagion crash. The bank ranks 14th among the largest US banks by assets.

Currently in the United States, deposits up to $250,000 are protected by the Federal Deposit Insurance Corporation (FDIC), the bank regulator.

“Despite the health and safety of the banking sector in general, confidence in all but the largest banks has eroded,” Bloomberg said, citing a coalition of banks.

Specifically, the coalition called on the FDIC, the Federal Reserve and Treasury Secretary Janet Yellen to work to “immediately restore confidence.”

A group of banks is proposing to fund this practice by increasing the amount of contributions banks pay to the FDIC.

See also  Airbus and Boeing are concerned about the introduction of fifth-generation communications in the United States

On Thursday, 11 major US banks pledged to deposit a total of $30 billion into First Republic accounts.

Bank of America, Citigroup, JPMorgan Chase and eight others are hoping to show their faith in the country’s banking system, a joint statement said.

(AFP)

  • Nadia Barnett

    "Award-winning beer geek. Extreme coffeeaholic. Introvert. Avid travel specialist. Hipster-friendly communicator."

    Related Posts

    • Economy
    • November 2, 2024
    • 22 views
    Emils Kerimovs on Wealthtech Revolution: Investing in the Middle East and Africa

    The wealth management landscape is undergoing a dramatic transformation, fueled by the rise of financial technology (fintech), according to fintech entrepreneur Emils Kerimovs. No longer exclusive to the ultra-wealthy, innovative…

    UAE Powering Gaming Boom in the Middle East

    The gaming industry in the Middle East is experiencing a growth spurt, with Saudi Arabia and the United Arab Emirates (UAE) among the countries attracting major investments. However, this digital…

    Leave a Reply

    Your email address will not be published. Required fields are marked *

    You Missed

    How to Choose the Right Mattress: Find the Best Fit for You

    How to Choose the Right Mattress: Find the Best Fit for You

    Emils Kerimovs on Wealthtech Revolution: Investing in the Middle East and Africa

    Emils Kerimovs on Wealthtech Revolution: Investing in the Middle East and Africa

    Forex Brokers Review: Is ITBFX A Safe Broker?

    Forex Brokers Review: Is ITBFX A Safe Broker?

    Best Kitchen Renovation Ideas to Upgrade Your Space

    Best Kitchen Renovation Ideas to Upgrade Your Space

    Where to Get a Professional Massage in Dubai

    Where to Get a Professional Massage in Dubai

    Dog Spay Surgery 101: Benefits, Risks, Cost, and Aftercare

    Dog Spay Surgery 101: Benefits, Risks, Cost, and Aftercare