Due to the crisis of American banks, due to the collapse of the banks “Silicon Valley” and “Signature Bank”, the “coalition of medium-sized banks in America” is asking the US government to guarantee all deposits of their customers for a period of two years.
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The bankruptcy of Silicon Bank (SVB) and Signature Bank caused a crisis of confidence in the US banking sector.
The Medium-Sized Banks Coalition of America (MBCA) asked the US Federal Banking Regulatory Authority to “guarantee all their customers’ deposits for a period of two years,” even for amounts exceeding the $250,000 limit, to avoid the transmission of Silicon Valley bankruptcy, according to the statement. This was reported by the US Bloomberg Agency.
The coalition said in a letter to the US authorities, according to the agency’s report, that this measure would “immediately stop the flight of deposits from smaller banks, stabilize the banking sector, and significantly reduce the possibility of the collapse of more banks.”
The bankruptcy of Silicon Bank (SVB) and Signature Bank caused a crisis of confidence in the sector.
Many customers of banks of similar size have withdrawn their money and deposited it in larger institutions such as JPMorgan or Bank of America, which are too big for the government to ignore bailing out in the event of a collapse.
And the US administration intervened, with a series of emergency measures to boost confidence in the banking sector, following the bankruptcy of the “Silicon Valley” bank threatened to spark a systematic crisis on a larger scale.
The market value of First Republic Bank, which mainly serves high-net-worth clients, plunged this week by 80%, amid fears of contagion collapse. This bank ranks 14th among the largest US banks in terms of assets.
Deposits are protected by the current US 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.
In particular, the Coalition of Midsize Banks in America called on the Insurance Corporation (FDIC), the Federal Reserve Board, and US Treasury Secretary Janet Yellen to work to “immediately restore confidence.”
Also read: Emerging Asian companies lose confidence in US banks following the collapse of “Silicon Valley”
Bank of America, Citigroup, JPMorgan Chase and eight other institutions hope to show their confidence in the country’s banking system, according to a joint statement.
It is noteworthy that the US authorities had taken a decision last week to close the “Silicon Valley” bank and imposed its supervision on it until it reopened on Monday under a new name, following it was unable to fulfill the rights of its customers, which caused a severe state of anxiety and panic in the global markets. US President Joe Biden reassured Americans of the strength of the banking system.
Also read: American concern regarding the collapse of the “Silicon Valley Bank” and Britain is moving to avoid damage
Affected by the crisis of American banks, Credit Suisse, the second largest bank in Switzerland, witnessed a 30.13% drop in its share price a few days ago. Wall Street shares opened lower, in light of fears of a possible collapse of Credit Suisse.
