Waters: Expanded deposit insurance is ‘on the table’

WASHINGTON — Maxine Waters, the top Democrat on the House Financial Services Committee, is floating the idea of guaranteeing all uninsured depositors in the future. 

“Are we going to make sure that we take care of the uninsured in the way that we did with this fallout from Silicon Valley Bank?” the California lawmaker said in an interview. “I don’t know, but I will have to put it on the table.” 

Waters didn’t commit to backing legislation for the idea but said that she’s looking at different legislative solutions for what she called regulatory shortcomings that allowed Silicon Valley Bank to mismanage its liquidity risk. Waters, like other Democrats, wants to revisit the 2018 clawback of some requirements for midsize banks like the failed Silicon Valley Bank — which was based in her home state — and Signature Bank. 

Rep. Maxine Waters
Rep. Maxine Waters of California, the ranking Democrat on the House Financial Services Committee, said that expanded deposit insurance legislation could be coming.

Andrew Harrer/Bloomberg

“There are a number of issues to be looked at, everything from the uninsured to stress testing to understanding what rules should be in place for how you determine that your balance sheet assets are not worth today what they could have been some time ago because of inflation and the increase in interest rates,” she said. “I’m sure some of it will need legislation.” 

Any losses associated with the resolution of Silicon Valley Bank or Signature Bank after their failures and extraordinary action by regulators to backstop uninsured depositors will come from the Deposit Insurance Fund and will be recovered by a special assessment on banks

“That fund is paid for by the premiums that are paid by the banks,” Waters said when asked about the fee impacting small banks whose balance sheets don’t

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FDIC calls out FTX US, other crypto firms over insurance claims

WASHINGTON — The Federal Deposit Insurance Corp. issued five cease-and-desist letters on Friday telling five cryptocurrency-related companies to stop making false and misleading statements about the availability of deposit insurance for their customers.

The FDIC announced Friday afternoon that it had directed five companies behind certain crypto websites — including FTX US, Cryptonews.com, Cryptosec.info, SmartAsset.com and FDICCrypto.com — to “take immediate corrective action to address false or misleading statements” concerning whether their customers’ funds were insured by the federal agency.

Under the Federal Deposit Insurance Act, the FDIC has the authority to prohibit use of the agency’s name or logo to imply customer funds are government insured when they are not. Each of the letters — which were signed by FDIC assistant general counsel Seth Rosebrock — noted that the FDIC had the authority to assess civil money penalties as well.

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The Federal Deposit Insurance Corp. sent letters to FTX US and other cryptocurrency firms for purportedly implying that crypto assets were FDIC insured, the latest in a series of efforts by the agency to clear up what it says are misleading claims by crypto firms with bank partnerships.

Bloomberg News

“Based upon evidence collected by the FDIC, each of these companies made false representations — including on their websites and social media accounts — stating or suggesting that certain crypto-related products are FDIC-insured or that stocks held in brokerage accounts are FDIC-insured ,” the agency said in a press release. “In one case, a company offering a so-called cryptocurrency also registered a domain name that suggests affiliation with or endorsement by the FDIC.”

The orders follow a similar one issued against Voyager, a cryptocurrency company that went bankrupt in July, after customers scrambled to understand what would happen to their dollars held by a partner bank after the crypto

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