The Revenge Of 2008, Con't

The big 4 banks (JPMorgan Chase, Bank of America Citibank and Wells Fargo) are too big to fail, we made that clear 15 years ago. Small local banks already have their deposits covered by FDIC insurance because very few depositors have accounts worth more than $250,000. That leaves mid-sized regional banks in the middle, and now they want TBTF status as well.

 

A coalition of midsize US banks asked federal regulators to extend FDIC insurance to all deposits for the next two years, arguing the guarantee is needed to avoid a wider run on the banks.

“Doing so will immediately halt the exodus of deposits from smaller banks, stabilize the banking sector and greatly reduce chances of more bank failures,” the Mid-Size Bank Coalition of America said in a letter to regulators seen by Bloomberg News.

The collapse this month of Silicon Valley Bank and Signature Bank prompted a flood of deposits out of regional lenders and into the nation’s largest banks, including JPMorgan Chase & Co. and Bank of America Corp. Customers spooked by the bank failures were taking refuge in firms seen as too big to fail.

“Notwithstanding the overall health and safety of the banking industry, confidence has been eroded in all but the largest banks,” the group said in the letter. “Confidence in our banking system as a whole must be immediately restored,” it said, adding that the deposit flight would accelerate should another bank fail.

The expanded insurance program should be paid for by the banks themselves by increasing the deposit-insurance assessment on lenders that choose to participate in increased coverage, the group proposed.

The MBCA’s letter was sent to the Federal Deposit Insurance Corp., the Comptroller of the Currency, the Federal Reserve and Treasury Secretary Janet Yellen.

 

Not only do I believe Yellen will do this, I also believe that nobody should be surprised when every single bank turns around and start charging massive new fees for depositors in order to pay for the higher FDIC premiums.  And since everyone will be doing it, the Biden administration can't single out a target. So, they'll look the other way while overdraft fees double, and new account fees skyrocket, and banks will end up making a profit and have FDIC coverage so that they can do whatever they want to with investment risk...because there won't be any risk for the banks.  It's all covered.

 

All covered by you and me.

 

The Big Casino is back, baby!