The Mercury News
Yellen says U.S. not considering `blanket' bank deposit insurance
Treasury Secretary Janet Yellen said regulators aren't looking to provide “blanket” deposit insurance to stabilize the US banking system, and that the heads of recently failed American lender should be held accountable.
“I have not considered or discussed anything having to do with blanket insurance or guarantees of deposits,” Yellen said Wednesday during a hearing before a Senate subcommittee, answering a question about whether the protections would be provided to all U.S. deposits. She didn't clarify if that refers to a temporary or permanent change in the cap.
Shares of San Franciscobased First Republic continued to sink on the news. The company's stock closed Wednesday at $13.33, down $2.44, or 15.47%.
Yellen has earlier said that the US is prepared to take further actions to protect depositors if smaller lenders are threatened. Her staff is studying ways to temporarily raise the federal insurance cap above $250,000 without Congressional approval in the event the crisis grows, Bloomberg News reported Monday.
Yellen, along with Federal Reserve Chair Jerome Powell, has been at the center of US government efforts to restore stability to the US banking sector and calm financial markets after the collapse of some mid-sized lenders. Oversight by regulators, and their steps to contain the crisis, have faced intense scrutiny from lawmakers and investors.
Her testimony Wednesday comes shortly after the Fed's rate-hike decision, with the central bank saying in a release that US baking system is “sound and resilient.” Powell also said in a press conference that the Fed is committed to learning lessons from the situation.
Regional bank shares slumped, dragging down the broader market, after