Medium-sized US banks ask the government to protect all deposits

A consortium of medium-sized US banks has asked the Federal Banking Regulatory Authority to guarantee all their customers’ deposits for two years, even for amounts over the $250,000 limit, to avoid a Silicon Valley bankruptcy contagion, according to Bloomberg.
The “Medium-Sized Banks Alliance in America” (MBCA) said in a letter to the authorities, according to the agency’s report, that this measure would “immediately stop the flight of deposits from smaller banks, lead to the stability of the banking sector, and significantly reduce the possibilities of the collapse of banks.” More banks.
The bankruptcies of Silicon Bank (SVB) and Signature Bank caused a crisis of confidence in the sector.
Many customers of similarly sized banks have withdrawn their money and deposited it in larger institutions, such as JPMorgan or Bank of America, which are too big for the government to neglect to bail out in the event of a collapse.
The market value of First Republic Bank, which mainly serves high-net-worth clients, has plunged over the past week by 80 per cent, amid fears of a contagion collapse. The bank ranks 14th among the largest US banks in terms of assets.
Currently in the US, deposits are protected by the banking regulator, the Federal Deposit Insurance Corporation (FDIC), up to $250,000.
“Despite the health and safety of the banking sector in general, confidence in all but the largest banks has eroded,” Bloomberg quoted the coalition of banks as saying.
In particular, the coalition called on the FDIC, the Federal Reserve and Treasury Secretary Janet Yellen to work to “immediately restore confidence.” The Banking Group proposes to finance this measure itself by increasing the amount of contributions that banks pay to the FDIC.
On Thursday, 11 major US banks pledged to deposit a total of $30 billion in First Republic accounts.
Bank of America, Citigroup, JPMorgan Chase and eight other institutions hope to demonstrate their confidence in the country’s banking system, according to a joint statement.
Bloomberg quoted informed sources as saying that First Citizens Bankers is evaluating an offer to acquire Silicon Valley Bank. The report said that at least one other institution is considering taking over the collapsed bank.
Reuters reported earlier this week that the Federal Deposit Insurance Corporation asked banks interested in acquiring Silicon Valley and Signature banks to submit offers.
The bids come in the wake of the institution’s control of Silicon Valley on the tenth of March (March) and Signature last Sunday, as the collapse of the two medium-sized banks in the United States caused concern in global financial markets due to fears of spillover from the repercussions of the crisis.
This will be the corporation’s second attempt to sell Silicon Valley, after an unsuccessful attempt a week ago. The sources told Reuters that the corporation has appointed investment bank Pepper Sandler to manage a new tender.
Meanwhile, Reuters quoted an informed source as saying that billionaire Warren Buffett had discussions with senior officials of President Joe Biden’s administration regarding the banking crisis.
Bloomberg reported earlier Saturday that Buffett had reached out to administration officials in recent days about the banking crisis. It seems that the Biden administration is trying to use Buffett to present his economic point of view and provide solutions, if any.