Janet Yellen Says Banks Won’t Get “Blanket” FDIC Coverage 

(PresidentialHill.com)- U.S. Treasury Secretary Janet Yellen informed senators that she did not discuss providing blanket protection to U.S. banking deposits without consent from Congress to calm the market after the collapse of two large banks this month. 

Reports show Yellen’s testimony at a Senate Appropriations subcommittee hearing damaged optimism for a rapid taxpayer bailout to stem the threat of further bank runs. 

As a result of the collapse of Silicon Valley Bank and Signature Bank, some finance organizations have implored the Biden administration and the FDIC to briefly secure all U.S. bank deposits. 

According to a report, after the SVB and Signature bank failures, government authorities were considering boosting the $250,000 insurance cap per depositor without legislative permission. When asked what adjustments she thought were necessary to FDIC insurance, Yellen said it was beneficial for Congress to look into them but did not elaborate. 

Yet when asked whether legislative permission was needed to insure all U.S. deposits, Yellen stated that she was not exploring that option and instead looked at banking risks individually. 

She specifically denied ever contemplating or discussing blanket insurance or deposit guarantees. There would be detailed judgment, but if a bank collapse is seen to cause systemic risk of a widespread bank run, we are likely to use the systemic risk exemption, which allows the FDIC to safeguard all depositors. 

Janet Yellen clarified this judgment would not be limited to big or medium-sized financial institutions. She also warned that a local or community bank’s collapse might trigger a run on many other institutions. 

According to a report, the former head of the FDIC, Sheila Bair, said that current regulators might need to reinstate a broad interim guarantee on all deposits made in the United States. To comply with the Dodd-Frank financial reform legislation requirements, a resolution of approval must be passed via Congress on an accelerated timetable. 

Senator Chris Van Hollen (D) told Fox News that lawmakers and regulators must address the $250,000 cap but that not every bank should be bailed out.