Small banks could lead to undoing

USAThe financial turbulence that began in Turkey on March 8 is taking on a new dimension every day. Experts, who think it is difficult to say that the crisis is over despite the measures taken by the regulatory authorities, fear that small and medium-sized banks, especially those operating in the region, could cause a financial apocalypse. It is said that the regional banks may face a new wave of bankruptcies if the crisis of confidence that caused the demise of four banks, three of which are based in the United States, continues.

THE INSURANCE SHOULD BE EXPANDED

That’s why midsize banks in the US want all deposits to be insured for 2 years to restore customer confidence. In fact, Silicon Valley Bank and Signature Bank failed after depositors withdrew their money. First Republic Bank also fell victim to customer migration that sank three of its US competitors. According to the Bloomberg report, the Mid-Cap US Coalition (MBCA), whose members are banks with assets of up to $100 billion, has sent letters to US Treasury Secretary Janet Yellen, to the US Federal Reserve, the Office of Money Control (OCC), and the FDIC. In its letter, MBCA asked federal regulators to extend FDIC insurance to cover all deposits for the next 2 years, arguing that this was necessary to prevent further deposit outflows from banks. On the other hand, the US Treasury considers that it is not yet necessary to take a step to guarantee all deposits.
however, planning is being carried out to decide the steps to follow in the face of the worsening of the situation. Under the current situation, the first $250,000 in depositors’ accounts is protected by the FDIC under current rules.

Eyes on the First Republic

To see if the situation is getting worse, eyes are on the First Republic, which continues to suffer despite the $30 billion provided by the Wall Street banks. The San Francisco-based bank was the victim of a customer flight that sank three of its US rivals, with an estimated $89 billion in deposit outflows. Eleven US banks tried last week to support First Republic Bank with $30 billion in cash flow. However, the bank’s shares, which cater to the personal banking needs of the tech world’s elite and other wealthy individuals, continued to fall rapidly.