Financial Stability Requires Deposit Insurance Reform
This past March, the collapse of Silicon Valley Bank triggered further bank failures, real fears of a financial crisis, and some urgent questions for policymakers: Is federal deposit insurance (FDI), in its current form, still capable of protecting financial stability?
More broadly: Who is our banking system for?
In a recent brief, Roosevelt’s Emily DiVito explored various FDI proposals experts have outlined in the months since, and how they speak to those bigger questions. And this week, she laid out that research at a Senate Banking Committee hearing: “Perspectives on Deposit Insurance Reform after Recent Bank Failures.”
“The precipitous failures of SVB, Signature, and FRB [First Republic Bank] shook the US banking industry—as well as the millions of depositors that hold money in the wider financial sector—and unearthed questions about who FDI serves and why,” she said in written testimony.
“[P]olicymakers would do well to wrestle with questions about the current system’s purpose and efficacy—and the implications that each potential reform carries.”
Learn more about three options for deposit insurance reform in DiVito’s testimony and in the full brief.
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