On Wednesday’s broadcast of NBC’s “MTP Daily,” Rep. Josh Harder (D-CA) argued that covering deposits above the $250,000 limit in the case of Silicon Valley Bank (SVB) means “the genie is out of the bottle” and the limit on deposits covered by the FDIC has “implicitly been raised, but we need to make it explicit” and raise the limit “pretty dramatically.”
Harder said, “I think we’re going to need to raise those insurance limits pretty dramatically. And we’re going to have to have banks paying those insurance premiums, because they’re the ones that were at fault here. They deserve to have a lot more skin in the game. I don’t want to be a nation where we have two or three banks that dominate financial services all across the country. We have to have a position for regional banks to continue to thrive. They’re the ones that understand local conditions in rural districts like mine the best. And if you look at Silicon Valley Bank’s customers, they were working to cure cancer, working to develop semiconductor chips, they were a fountain of innovation and entrepreneurship. So, even as we make sure that there’s regulation and scrutiny that has to be higher going forward, I want to keep that vibrant spirit in these regional banks alive.”
He later added, “I think that the genie is out of the bottle and I think that we’re going to have to change the system going forward. We’re going to have to raise those insurance caps. You’re right that they’ve already implicitly been raised, but we need to make it explicit. And we need to make sure, as I said before, that banks that have the most skin in the game are the ones that are responsible for paying those premiums and ensuring that they have the strongest incentive to continue to make sure that this mismanagement doesn’t happen in the future.”
Follow Ian Hanchett on Twitter @IanHanchett
