The Strategist

U.S. Treasury Department pondering temporary insurance for all bank deposits

03/22/2023 - 10:03

According to Bloomberg’s sources, U.S. Treasury officials are looking into the potential of temporarily expanding bank deposit insurance to cover all deposits, not just those up to $250,000.

Bloomberg's sources say that the Treasury Department is determining whether it has the power to make such a decision without the approval of Congress.

All deposits must be insured, according to a coalition of banks, who believe that doing so will help to avert a potential banking crisis. Since the authorities have already taken action to assist banks in responding to customer demand for withdrawal of funds, if any, they do not view this as being essential, according to the sources.

The Finance Ministry may employ the Exchange Stabilization Fund to insure deposits, which is typically used to purchase and sell foreign currency as well as provide financing to foreign governments. The agency notes that it is the only fund that the Treasury has complete authority over; all other spending and funding falls under Congress' purview.

According to Michael Kikukawa, a press secretary for the White House, authorities will back smaller regional banks using the tools at their disposal, Bloomberg writes.