He added that “all depositors are being protected shareholders are losing their investments, and critically, taxpayers are not the ones that are on the hook.”īiden said that going forward, he was calling on Congress to “give regulators the tools, hold bank executives accountable,” and that he had called on regulators to “strengthen regulations and supervision of large and regional banks.” “These actions are going to make sure that the banking system is safe and sound,” Biden said, “and that includes protecting small businesses across the country who need to make payroll for workers and their small businesses.” Speaking at a small-business event in the Rose Garden Monday, the president began his remarks by saying he was “pleased to say that the regulators have taken action to facilitate the sale of First Republic Bank and ensure that all depositors are protected and the taxpayers are not on the hook.” President Joe Biden said regulatory action taken on First Republican Bank Monday would “make sure that the banking system is safe and sound,” while calling on Congress to hold banks accountable and to raise the debt limit. President Joe Biden speaks in the Rose Garden of the White House in Washington, DC, on May 1. However, increasing deposit insurance poses a moral hazard since it could lead to banks taking on more risk with their depositors' money without having to worry as much about a bank run. It found that targeting business accounts for increased insurance was the best option since it has the largest "financial stability benefits relative to its costs." The FDIC considered two other deposit insurance reforms: raising the insurance cap across all bank accounts, and extending unlimited deposit insurance to all accounts. The agency's proposal, outlined in a report it released Monday, did not specify what it thinks would be an appropriate increased level of deposit insurance for business payment accounts. It also provided temporary unlimited deposit insurance to non-interest bearing accounts in the wake of the Great Recession. But the agency backed deposits exceeding that limit when SVB and Signature failed, in order to reduce the risk of further bank runs. The FDIC said Monday in a report that it is advocating for an increase in the deposit insurance limit for business payment accounts following the recent collapse of Silicon Valley Bank, Signature Bank and, on Monday, First Republic Bank.Ĭurrently, the FDIC insures up to $250,000 per depositor for each account ownership category. The Federal Deposit Insurance Corporation's fund used to back bank depositors' money is estimated to have a balance of $92.7 billion after the collapse of First Republic Bank. Investors will be watching for clues on how the central bank will proceed with its inflation-fighting plan and whether the recent banking turmoil has altered Fed officials' plans.Īlso on deck are earnings reports from Advanced Micro Devices, Starbucks, Ford, Kraft Heinz and more later this week.Īs stocks settle after the trading day, levels might still change slightly. The Federal Reserve begins its two-day monetary policy meeting Tuesday, which is expected to conclude with a quarter-point rate hike. Meanwhile, the latest ISM manufacturing report revealed that manufacturing activity contracted for the sixth straight month in April. Shares of First Republic Bank remained halted from early Monday morning. The SPDR S&P 500 Regional Bank exchange-traded fund, which tracks a range of mid-sized banks, fell 2.9%. Shares of JPMorgan Chase rose 2.1% after the bank acquired First Republic and said that the banking system is stable. Stocks inched down Monday as investors digested JPMorgan Chase's purchase of most of First Republic Bank's assets.
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