Questions Emerge Amid Federal Reactions to Bank Failures

Last month, many Americans were stunned to learn about the failure of multiple banks, including Silicon Valley Bank. These financial institutions met their demise as part of a domino effect that stems from the Federal Reserve raising interest rates.

Hence, the FDIC had to step in and ensure that users with covered deposits would eventually see their money again.

In the wake of these collapses, there have been various debates about how this should all be handled. Though certain calls for federal intervention and regulation are raising some red flags, according to FEE.

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Some regulators tied to federal banking have moved to garner protections for all depositors, rather than only those who fall under the $250,000 limit imposed by the FDIC.

By going around this limit, these regulators are opening the door to the FDIC taking on more than it was meant or promised to handle.

Some might argue that this takes the incentive away from financial institutions to do their part and ensure they don’t collapse as Silicon Valley Bank did.

Amid the aforementioned bank failures, Republican lawmakers have likewise stressed that US taxpayers can’t be expected to foot the bill for bailouts. Taxpayers are already going through enough as is and there’s no sign of the economy smoothing out anytime soon.

The last thing the average taxpayer in this country needs is more being added to their plate.

More to Come?

These recent bank failures have raised questions about if more disasters are coming or if other financial institutions will make tweaks to ensure they don’t collapse as well.

In the meantime, despite the Federal Reserve’s role in bank failures, the institution has made no indication that it plans to stop moving up interest rates. That’s unfortunate for not just banks, but also for the everyday American.

This article appeared in New Vision News and has been published here with permission.