US Looking At Ways To Expand FDIC Cover To All Deposits: Report

U.S. authorities are reportedly analyzing means to temporarily expand Federal Deposit Insurance Corp‘s coverage to all deposits, something that a coalition of banks has been calling for, arguing that it’s needed to stop a potential financial crisis.

Treasury Department staff are studying whether federal regulators have enough emergency authority to temporarily insure deposits over the current $250,000 cap on most accounts without formal consent from Congress, reported Bloomberg, citing people with knowledge of the talks.

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One of the points under discussion for expanding FDIC insurance is to use the Treasury’s authority to take emergency action and depend on the Exchange Stabilization Fund, the report said citing sources.

The pool of funds is usually used to buy or sell currencies and to provide financing to foreign governments. However, the fund has been utilized as a backstop for emergency lending facilities by the central bank in recent years, the report said.

“Due to decisive recent actions, the situation has stabilized, deposit flows are improving and Americans can have confidence in the safety of their deposits,” a Treasury spokeswoman said in a statement, according to the report.

Lawmaker Consent: While some lawmakers have indicated they are considering changes to the current $250,000 FDIC insurance cap, a lot of House conservatives have voiced their take against a 100% guarantee.

“Any universal guarantee on all bank deposits, whether implicit or explicit, enshrines a dangerous precedent that simply encourages future irresponsible behavior to be paid for by those not involved who followed the rules,” the House Freedom Caucus said in a statement, according to the report.

Musk Remarks: Replying to a tweet about the story, Tesla Chief Elon Musk said it is absolutely necessary to stop the bank runs.

“Absolutely required to stop bank runs,” Musk tweeted.