FDIC (US Federal Deposit Insurance Corporation)

Main article: Banks in the United States

2023

Plan for reforming the deposit insurance system

The FDIC wants a massive reorganisation of the deposit insurance system after recent bank bankruptcies partially devastated the cash fund the government uses to protect creditors' customers.

The Federal Deposit Insurance Corporation on May 1, 2023 proposed three options for the "bedrock" fund, which at this time covers up to $250,000 in most accounts. In its report, the FDIC said a move to a "targeted coverage" approach where business accounts receive more coverage than the current limit would be a better option for financial stability. However, such a change would require action by the US Congress. Other options include maintaining previous coverage or moving to cover all deposits, the FDIC said.

Exhaustion of reserves after payments in case of collapse of SVB and Signature Bank

All available reserves of the FDIC heated up in March 2023 for rescue SVB and Signature Bank. Before the March banking show, the FDIC had 128.2 billion reserves, of which almost 126 billion in bonds and 2.5 billion in cash. Given the unrealized losses, in reality there was no more than 110 billion, Spydell Finance wrote.

The current balance sheet for April 29, 2023 is unknown, but given the scale of loans from the Fed ($170 billion), plus another rescue from the US Treasury for tens of billions, there really remained an insignificant free reserve.

Therefore, in fact, the guarantee of deposits through FDIC is a fiction, based on the indefinite Call option on the scenario "we kind of guarantee deposits, but we hope that bankruptcy will never happen."

The FDIC wrapped up after rescuing two banks with direct obligations of 208 billion on deposits, and in April, First Republic Bank was another on the way with 70 billion deposits.