Before the recent collapse of Silicon Valley Bank and Signature Bank, most Americans were not worried about insurance limits on banks, since almost all US banks are backed by the FDIC. But now there’s growing support for raising that insurance cap.
Right now, $250,000 seems to be the number on everyone’s minds. That’s the Federal Deposit Insurance Corporation’s standard limit, meaning any bank deposits up to that amount are protected by the independent government agency. Before the recent collapse of Silicon Valley Bank and Signature Bank, most Americans were not worried about insurance limits on banks, since almost all US banks are backed by the FDIC. But now there’s growing support for raising that insurance cap.
In the case of banks, that means they will be more likely to take on riskier bets if they know they are more protected, raising the possibility of a repeat of this month’s chaos. Officials will have to take this tradeoff into account when considering policy changes, especially if scrapping the limit altogether. The term has been thrown around lately, after the government intervened in the banking meltdown to support the failed banks’ depositors.
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