Warren says Congress should raise FDIC insurance cap

Senator Elizabeth Warren (D-Massachusetts) said in an interview on Sunday that Congress should raise the federal insurance cap on bank deposits from $250,000.

“I think the removal of the FDIC’s insurance cap is a good move,” Warren said on CBS’s “Face The Nation,” referring to the Federal Deposit Insurance Corporation. “The question is where are the correct numbers for lifting?

“Two million dollars? Five million dollars? Ten million dollars?”

The FDIC currently guarantees deposits of up to $250,000 per customer, but this level is now in question after the federal government decided to back all uninsured deposits at Silicon Valley banks.

Federal regulators have moved to add safety nets to all bank deposits to limit the wider economic impact of bank failures. The premium was paid by the Federal Insurance Fund, which receives regular payments from banks, but the lawmaker wonders whether the $250,000 level of insurance is sufficient.

Warren has accused bank regulators of tolerating the factors that caused the collapse of Silicon Valley banks, arguing that the systematic weakening of regulation over the past five years ultimately led to the bank’s collapse. She said on Sunday that raising the FDIC insurance limit would place more liability on federal bank regulators, which she says sleep while driving.

“These banks have to do this because they are not regulated,” Warren told CBS.

Some Republicans have jumped on the Biden administration’s move to boost all deposits in Silicon Valley banks, describing it as a bailout for bank executives and wealthy depositors. But Warren said federal insurance is intended to ensure that small businesses, among other goals, will always have access to money to cover basic expenses.

“Small businesses need to be able to count on money for payroll and utility bills,” says Warren. “Nonprofits need to be able to do that. These are not people who can investigate the safety and health of individual banks.”