“The recent failures of Silicon Valley Bank and Signature Bank, and the decision to approve Systemic Risk Exceptions to protect the uninsured depositors at those institutions, raised fundamental questions about the role of deposit insurance in the United States banking system,” Martin J. Gruenberg, chairman of the Federal Deposit Insurance Corp (FDIC), said in a statement.
“This report is an effort to place these recent developments in the context of the history, evolution, and purpose of deposit insurance since the FDIC was created in 1933.”
As part of its analysis of the banking crisis, the FDIC outlined three options for deposit insurance reforms.
The first, it said, would be a limited coverage option which maintains the current deposit insurance framework insuring depositors’ money by up to a certain limit — possibly higher than the current $250,000 limit.
The second would be an “unlimited coverage” option that extends unlimited deposit insurance coverage to all depositors.
The third would be “targeted coverage” which offers different deposit insurance limits across account types, where business payment accounts receive significantly higher coverage than other accounts.
The report surfaced as the FDIC closed San Francisco-based First Republic Bank, the third casualty in the country’s banking crisis. Top US bank JPMorgan Chase bought assets and deposits worth over $330 billion that belonged to First Republic, which has struggled since the collapse of Silicon Valley Bank and Signature Bank in March,
All depositors of First Republic Bank will become depositors of JPMorgan Chase Bank, and will have full access to all of their deposits, the FDIC said. As part of the transaction, First Republic Bank’s 84 offices in eight states will reopen as branches of JPMorgan Chase Bank.