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What are the 7 Key Takeaways from Facebook's Libra Hearings?

The debate on Facebook’s Libra continues with the hearing with the Senate Banking Committee (“Senate hearing”) on 16 July and the United States House Committee of Financial Services (“House hearing”) on 17 July. Here are the 7 key takeaways from the two hearings.

Libra is centralized

Regulators believed that the composition of the Libra Association has made Libra “highly centralized”. In the House hearing, New York Congresswoman Alexandria Ocasio-Cortez (AOC) questioned if the members of the Libra Association is democratically elected. David Marcus, the Head of Calibra said that the members are not elected but was governed by membership standards. When AOC realized the investment of $10 million as the criteria of founding members, she concluded Libra as “a currency controlled by an undemocratically-selected coalition of largely massive corporations.”

With regards to the eligibility of using Calibra and Libra, Marcus responded to Representative Sean Duffy’s question that anyone can use Calibra and Libra in jurisdictions where Facebook operates after they performed KYC procedures. However, when Marcus was asked by North Carolina Representative Alma Adams on whether any user can become a node on Libra blockchain, he denied and said that only large corporations with blockchain technology or finance backgrounds can become a member of the Libra association and a node on the Libra blockchain.

With the lack of decentralization, Representative Warren Davidson slammed Libra in the House hearing suggesting Libra falls in the same category as a run of the million sh*tcoins.

Can Facebook protect data privacy with its notorious track record?

In the Senate hearing, Ohio U.S. Sen. Sherrod Brown commenced with the poor history of Facebook in privacy protection, saying “Facebook has demonstrated scandal after scandal that it doesn’t deserve our trust.” Such skepticism continued in the House hearing, where committee chair Rep. Maxine Waters condemned Facebook with a “demonstrated pattern of failing to keep consumer data private on a scale similar to Equifax.” For example, Facebook purportedly influenced the 2016 U.S. Presidential elections by allowing malicious Russian state actors to purchase and target ads.

The discussion switched to data portability. Sen. Warner questioned if Facebook allows data portability in wallets.

“If a Facebook user wishes to use a wallet other than Calibra, will you make it easy to allow the export of other data?”

Marcus answered that Facebook will facilitate data export for wallets other than Calibra, and he hedged the same commitment for Whatsapp and Messenger. He added that the Calibra network will separate social and financial data and they will impose the highest privacy standard to earn people’s trust Sen. Warren expressed her concern on Facebook’s ability to monetize personal data among platforms. Senator McSally followed up on this and stressed that there are no grounds for committees to trust Facebook with “the track record of failing and violating and deceiving in the past”.

In the Senate hearing, Senator Robert Menendez asked if Facebook will inform users in 48 hours in cases of the data breach. Marcus replaced “48 hours” with “a reasonable length of time”.

Why Switzerland?

Both hearings questioned the registration venue for Libra Corporation. In the Senate hearing, committee chair Mike Crapo wondered why Libra Corporation is registered in Switzerland but not the U.S. Marcus replied that Libra Corporation will also register with U.S regulators in the future.

The committees are clearly not satisfied with what Marcus said in the Senate hearing. Representative Patrick McHenry raised similar concerns and Marcus explained that Switzerland is an “international place” to conduct businesses. He further addressed Representative Josh Gottheimer’s concern that the choice of Switzerland has nothing to do with evading U.S. regulations.

Several lawmakers also worried about the threat of Facebook’s Libra towards the dominance of USD. Marcus stated that the reserve is 50% backed by USD, with the Euro, the British Pound, and the Japanese Yen included as the collateral.

How about KYC and AML?

In the Senate hearing, Senator Cortez Mastro, former District Attorney of Nevada seek Marcus’s commitment to the compliance of AML and sanction laws. Marcus highlighted that they are working to comply with FinCEN regulation.

In the House hearing, Rep. David Scott explicitly expressed his concern on how Facebook Libra complies with KYC, AML and ensures the safety of the existing financial system. Marcus replied that they will launch AML guidelines to satisfy the needs of AML, KYC, and counter-terrorist financing. With regards to potential illegal activities on Libra blockchain, Marcus believed that this can be improved by system design and proper KYC controls to ensure on and off-ramps are properly regulated.

Can Facebook protect consumer’s funds on Libra?

Senator Tester questioned Libra’s ability to protect consumers against loss of funds or fraudulent purchases, along the line of credit cards or the FDIC.

While Marcus claimed they will try their best to resolve those issues as soon as possible, Tester stressed that proper solutions must be in place before Libra goes live.

Representative Carolyn Maloney asked Marcus if he would at least promise to conduct a pilot test before the full launch of Libra. She assumed the pilot test would involve less than 1 million users and overseen by the Federal Reserve and the Securities and Exchange Commission (SEC). Marcus did not provide a clear response and merely stated that they will work closely with regulators.

Is Libra public good?

AOC asked Marcus if Libra is a public good. Marcus claimed that “sovereign currency should remain sovereign” and said he is not in the position to decide whether Libra is a public good.

Praise for Bitcoin?

House minority leader Kevin McCarthy told CNBC that unlike Trump, he likes Bitcoin and the security of blockchain technology. He believed that lawmakers are skeptical about Facebook’s Libra because Libra is centralized, which can threaten the safety of the financial system. Lawmakers are not hostile towards cryptocurrency, he added.

Final words..

We believe there are some questions not properly answered in both the Senate and House hearings, such as the main reason for Facebook launching Libra. Going forward, the centralization of the Libra Association and the notorious history of privacy breach will be the main obstacles for Facebook Libra to go public.

US Financial Regulators Aiming at How Banks Could Hold Bitcoin & Crypto Assets, Says FDIC Chairperson

A major bank regulator has stated that U.S. officials are working on offering a clearer path to banks and their clients looking to hold crypto assets to maintain control over the rapidly growing assets.

Speaking at the Money 20/20 Fintech Conference on Monday, October 25, Jelena McWilliams, the chairperson of the Federal Deposit Insurance Corporation (FDIC), announced that the FDIC is working with the Federal Reserve and the Office of the Comptroller of the Currency (OCC) to look into providing regulatory clarity for banks handling cryptocurrencies, including stablecoins.

And that includes working on creating clearer rules on banks providing custody of crypto assets to facilitate transactions with clients, using cryptocurrencies as collateral for loans or even keeping them on their balance sheets as more traditional assets.

McWilliam said in the fintech conference:

“I think we need to empower banks in this space while managing and mitigating risk appropriately. If we don’t bring this activity inside the banks, it will grow outside the banks.… Federal regulators won’t be able to regulate it,”

McWilliams’ comments suggest that regulators are looking for a way to integrate cryptocurrency into mainstream banking supervision.

“My goal in this interagency group is basically to provide banks with a way to act as a custodian of these assets, to use crypto assets, digital assets as a form of collateral,” McWilliams stated and added: “At some point, we’re going to ask ourselves how and under what circumstances banks can keep them on their balance sheets.”

While McWilliams acknowledged that it is difficult to understand how to allow the volatile assets as collateral and include them on bank balance sheets, she stated that the more straightforward solution would be getting regulators to establish a roadmap for the safekeeping cryptocurrencies.

Amid Ongoing Uncertainty

Lack of regulatory clarity involving crypto assets in the U.S. has been an issue for several firms fearing legal action or other forms of governmental backlash.

For instance, while the previous leadership under Brian Brooks, the OCC, took a positive, aggressive approach to bring cryptocurrencies to banks, including bank custody services for crypto assets, other agencies have been slower to act.

In May, acting controller Michael Hsu even ordered a review of the cryptocurrency guidance issued by the OCC under his predecessor, fintech-friendly Brian Brooks.

McWilliam’s comments offer the most comprehensive picture to date of what regulators were examining as part of a cryptocurrency “sprint” team first announced earlier this year.

In May, Randal Quarles, the Fed vice chairman of supervision, announced the formation of an “interagency sprint team” involving three agencies (The FDIC, the Federal Reserve, and the Office of the Comptroller of the Currency) that focused on crypto regulation.

McWilliams’ comments show that the coordination among the agencies might be beginning to bear fruit.

FDIC Says Deposits and Cryptos at Non-Bank Entities Are Uninsured

The Federal Deposit Insurance Corporation (FDIC), an independent federal agency insuring deposits in U.S. banks in the event of bank failures, on Friday told American commercial banks to ensure that any crypto firms they partner with do not overstate the reach of deposit insurance.

The financial regulator is concerned that consumers may be confused about how safe their funds are when placed in cryptocurrencies, particularly in cases where crypto companies offer a mix of uninsured crypto products alongside insured bank deposit products.

In a statement on Friday, the FDIC advisory said: “Inaccurate representations about deposit insurance by non-banks, including crypto companies, may confuse the non-bank’s customers and cause those customers to mistakenly believe they are protected against any type of loss.”

Specifically, the FDIC told banks to ensure that they make it clear to the public that deposit insurance only covers insured banks in case of collapse. The agency stated that insurance protection does not cover failures of any non-bank partners, which can include crypto custodians, exchanges, and wallet providers.

The FDIC urged banks dealing with crypto firms that they should make their customers know which of their funds will be insured by the government in the event of a collapse, and which have no protection.

Voyager Digital on Spotlight Again

The new advisory by the U.S. banking regulator comes after the Federal Reserve and the FDIC on Thursday ordered crypto brokerage firm Voyager Digital to stop telling clients that their deposits are protected from losses by the Federal Deposit Insurance Corporation because such claims are not true.

Voyager has stated that it is federally insured on its website, mobile app, and social media accounts.

Voyager’s website on Friday stated: “Your USD is held by our banking partner, Metropolitan Commercial Bank, which is FDIC insured, so the cash you hold with Voyager is protected.” The website claimed deposits are “FDIC insured on USD $250,000.”

On Thursday, the FDIC and the Federal Reserve issued a joint letter to Voyager, demanding the crypto broker to scrub such claims from its website and social media, and to write a confirmation note by Monday that they have done so.

Early this month, the FDIC was probing how bankrupt crypto broker Voyager was marketing itself to customers.

FDIC officials identified that Voyager is violating the Federal Deposit Insurance Act, which prohibits anyone from implying that deposits are insured when they are not.

Voyager Digital has a bank account with Metropolitan Commercial Bank of New York. The FDIC pointed out that while the bank account is insured, customers opening and using accounts on the Voyager Digital platform are not insured.

Voyager is one of several crypto firms that have been adversely affected by the market’s collapse. On 5th July, the firm filed for Chapter 11 bankruptcy protection in the Southern District of New York following a recent financial crisis impacting the crypto industry.

Why Cryptocurrencies Are Not Insured by the FDIC

The FDIC is a government agency responsible for giving insurance protection to the public’s bank accounts — such as checking, savings and CDs — in case of unforeseen losses.

Having an FDIC insured account means that anyone who has at least $250,000 deposited into a bank would have their funds reimbursed in case the bank collapses unexpectedly.

However, speculative investments such as cryptocurrencies and stocks, are normally not FDIC insured. Such assets are not insured by the FDIC because they do not qualify as financial deposits and carry a certain amount of risk that investors opt in to bear. That is according to the regulator.

FDIC Calls Out FTX US, Other Crypto Firms to Stop Misleading Users About Deposit Protection

The Federal Deposit Insurance Corporation (FDIC), a US government agency tasked with stabilizing the financial system in the event of bank failures, on Friday issued five cease-and-desist letters demanding five crypto-related firms stop making false and misleading statements about the availability of deposit insurance for their clients.

The FDIC ordered five firms 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 power to prohibit use of the agency’s name or logo to imply customer funds are government insured when they are not.

In a statement, the regulator said: “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.”

Concerning the case surrounding FTX.US, the FDIC’s letter cited a tweet from FTX. US President Brett Harrison that claims “direct deposits from employers to FTX and stocks are held in FDIC-insured accounts.”

For the other case, the cease-and-desist letter pointed out that SmartAsset.com identified FTX as an FDIC-insured exchange.

In general, the agency regulator said such claims are false and misleading statements implying that uninsured products are FDIC-insured.

The letters directed the above-mentioned companies to immediately remove the statements that suggest any firms deposited with FTX are FDIC-insured.

FDIC has given 15 days to these crypto-related firms to provide written confirmation that they have complied with the requests.

So far, FTX.US and SmartAsset.com have responded and said they have removed such content from their respective company’s online presence.

Harrison tweeted on Friday that he deleted the post and said the content didn’t mean to indicate that crypto assets deposited in FTX are insured by the FDIC, but rather “USD deposits from employers were held at insured banks.”

SmartAsset CEO and co-founder Michael Carvin also stated: “We are in communication with the FDIC to assess the matter and have removed the content at issue in the meantime.”

Controversy Surrounding Voyager

Late last month, FDIC issued a Financial Institution Advisory Letter informing the general public that the regulator does not insure assets issued by non-banking institutions like crypto companies.

On 29th July, FDIC clashed with cryptocurrency brokerage Voyager Digital when it ordered the crypto lender to stop telling clients that their deposits are protected from losses by the Federal Deposit Insurance Corporation. The agency informed the public that such claims are not true.

Voyager mentioned its federally insured status on its website, social media accounts, and mobile app, the agency revealed.

FDIC said Voyager violated the Federal Deposit Insurance Act, which prohibits anyone from implying that deposits are insured when they are not.

Voyager Digital has a bank account with Metropolitan Commercial Bank of New York. The FDIC said that the account is insured.

But the agency clarified that customers opening and using accounts on the Voyager Digital platform are not insured.

FDIC to Offer Guidance on Crypto After it Understands its Associated Risks

Martin Gruenberg, the acting Head of the Federal Deposit Insurance Commission (FDIC) has assured that banking regulators in the United States will be responsible for providing adequate guidelines to financial institutions on how to deal with digital currencies.

Speaking at the Brookings Institute on Thursday, Gruenberg said this guidance will only come when regulators have gained a proper understanding of the risks that are associated with these nascent and volatile asset class.

“We must understand and assess the risks associated with these activities the same way that we would assess the risks related to any other new activity,” said Martin Gruenberg.

Gruenberg is not dismissive of the potential of digital currencies and foresees a scenario when assets like Stablecoins can be adapted to complement the Federal Reserve’s forthcoming FedNow service. Additionally, Gruenberg insinuated that stablecoins can also complement the Digital Dollar, the United States proposed Central Bank Digital Currency (CBDC) when it finally decides to float one.

In his caution, however, the acting FDIC Chairman said stablecoins that are designed for payments will be safer if they are hosted on permissioned blockchains with robust governance and compliance mechanisms.

“A public unpermissioned blockchain… poses enormous challenges in terms of basic supervisory responsibilities for safety and soundness, consumer protection and anti-money laundering,” Gruenberg said.

Over the years, the FDIC has played a more subtle role in regulating some Virtual Assets Service Providers (VASPs) whose business models appear like banking services. In one of such move, the regulator issued a cease-and-desist order against the now embattled crypto lending firm, Voyager Digital as well as a warning to FTX US for presenting their products to its customers as though they were insured by the FDIC.

Overall, the FDIC has maintained that any form of deposits made at non-banking institutions are not insured by the government and that investors cannot access any form of protection in the case of a mishap.

Defunct Crypto Lender BlockFi Has $227 Million in Uninsured Funds with Troubled Silicon Valley Bank

Air pollution is a significant public health concern worldwide, and recent studies have found high levels of air pollution in major cities around the world. The issue is particularly prevalent in developing countries, where industrialization and urbanization have led to increased emissions from transportation and manufacturing.

One sector that has emerged in response to this problem is the clean energy industry, which seeks to reduce emissions and promote sustainability. Clean energy encompasses a range of technologies, including renewable energy sources like solar and wind power, as well as energy-efficient products and services.

Despite the growth of the clean energy industry, however, air pollution remains a major challenge in many parts of the world. In particular, major cities are often hotspots for pollution, due to factors like high population density, heavy traffic, and industrial activity.

One company that has been impacted by this issue is BlockFi, a defunct crypto lender that has $227 million in uninsured funds allocated to a money market mutual fund (MMMF) offered by Silicon Valley Bank (SVB). SVB was shut down by the California Department of Financial Protection and Innovation on March 10, with no specifics offered at the time of the closure.

The funds in question are not FDIC-insured, not insured by any federal government agency, and “not guaranteed by the bank.” While investors are issued fund shares in exchange for their capital, the risk to BlockFi in this instance is most likely the fund’s performance, rather than anything related to SVB’s financial woes.

The recent Silvergate bankruptcy has also impacted the crypto market, causing prices to tumble since the crypto-friendly bank’s financial woes came to light at the beginning of March. One firm that has been directly impacted by the SVB closure and the Silvergate bankruptcy is USD Coin (USDC) issuer Circle.

As of January 31, $8.6 billion, or roughly 20% of Circle’s reserves, were held in several U.S. financial institutions, including SVB, Silvergate Bank, and Bank of New York Mellon. While the exact value held in SVB and Silvergate is unclear, Circle has stated that it and USDC will continue to “operate normally” as it awaits “clarity on how the FDIC receivership of SVB will impact its depositors.”

Overall, the issue of air pollution in major cities and the ongoing challenges faced by the clean energy industry highlight the need for continued innovation and investment in sustainable technologies. As for the impact of the SVB closure and the Silvergate bankruptcy on the crypto market, it remains to be seen how these developments will play out in the coming weeks and months.

Future of Silicon Valley Bank May Put Trillions of Dollars at Risk

The potential collapse of Silicon Valley Bank (SVB) has caused alarm among regulators, investors, and depositors alike, with experts warning that the fallout could extend far beyond the tech bank itself. The Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) have been closely monitoring the situation and considering their options, but there are growing concerns that any missteps could have serious consequences for small banks across the United States.

According to Bob Elliot, a former Bridgewater executive and CEO of investment firm Unlimited, nearly a third of all deposits in the United States are held in small banks, and around 50% of these deposits are uninsured. While the FDIC does insure small deposits in all banks in the US, this only covers about $9 trillion of the nearly $17 trillion of outstanding deposit base. Under the hood, the coverage rate is roughly 50% across most institutions, while credit unions are higher.

With small banks in the United States holding $6.8 trillion in assets and $680 billion in equity as of February 2023, the failure of a major institution like SVB could trigger a chain reaction that puts thousands of small banks at risk of a run. As Elliot points out, this is not just a Wall Street problem, but a “main street problem” that could have serious implications for businesses and individuals across the country.

These concerns have been echoed by others in the industry, including Y Combinator CEO Garry Tan, who created a petition urging regulators to step in and implement a backstop for depositors. The petition notes that nearly 40,000 of all depositors at Silicon Valley Bank are small businesses, and warns that over 100,000 people could lose their jobs if swift action is not taken.

In response to these concerns, the FDIC and the Fed are reportedly discussing the creation of a fund to backstop more deposits at troubled banks. This fund would respond to the SVB collapse and would be intended to reassure depositors and reduce panic. While the details of this fund are still being worked out, it is clear that regulators are taking the situation seriously and are actively looking for ways to mitigate the potential risks.

Silicon Valley Bank is one of the top 20 largest banks in the United States and provides banking services to many crypto-friendly venture firms. The bank’s collapse would be felt throughout the industry, with assets from blockchain venture capitalists totaling more than $6 billion at the bank. Some of the largest investors include Andreessen Horowitz with $2.85 billion, Paradigm with $1.72 billion, and Pantera Capital with $560 million.

The future of Silicon Valley Bank is still uncertain, but what is clear is that the decisions made by regulators in the coming days and weeks will have significant consequences for the banking industry as a whole. As Elliot warns, the potential risks extend far beyond SVB itself and could put trillions of dollars at risk if not handled carefully.

FDIC Requires Potential Buyers of Failed U.S. Banks to Give Up Crypto Services

The Federal Deposit Insurance Corporation (FDIC) has requested banks interested in acquiring failed U.S. lenders, such as Silicon Valley Bank and Signature Bank, to submit their bids by March 17. The authority has also requested potential buyers to be banks with an existing bank charter, prioritizing traditional lenders over private equity firms. If the whole company sales do not happen, the FDIC may consider offers for parts of the banks. However, the FDIC has required any buyer of Signature Bank to agree to give up all cryptocurrency business at the bank.

New York-based Signature Bank is a crypto-friendly bank in the United States and is known for its many partnerships in the crypto industry, including Coinbase exchange, Paxos Trust, BitGo, and Celsius, among others. However, the FDIC’s request to give up all cryptocurrency business may impact Signature Bank’s reputation in the crypto industry.

The news comes amid concerns expressed by U.S. Representative Tom Emmer, who wrote a letter to the FDIC expressing his concerns that the federal government is “weaponizing” issues around the banking industry to go after crypto. Emmer believes that such actions to weaponize recent instability in the banking sector are inappropriate and could lead to broader financial instability.

New York regulators closed down and took over Signature Bank on March 12, appointing the FDIC as the receiver. To protect depositors, the FDIC transferred all the deposits and most of the assets of Signature Bank to Signature Bridge Bank, a full-service bank that will be operated by the FDIC as it markets the institution to potential bidders. However, according to Barney Frank, a former member of the U.S. House of Representatives, New York regulators closed Signature Bank despite no insolvency. Frank speculated that the action was to demonstrate force over the crypto industry, being a “very strong anti-crypto message.” The bank has also reportedly been investigated for alleged money laundering.

The FDIC has previously stated that it does not prohibit or discourage banking organizations from providing banking services to customers of “any specific class or type, as permitted by law or regulation.” However, the FDIC’s request for potential buyers of Signature Bank to give up all cryptocurrency business may suggest a shift in the regulator’s stance towards crypto.

In conclusion, the FDIC’s request for potential buyers of failed U.S. banks to give up all cryptocurrency business may have implications for the future of the crypto industry in the United States. It remains to be seen whether other regulators will follow suit in restricting crypto services in the banking industry.

Federal Regulators Testify on Bank Failures

Representatives from the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve will provide testimony about the failure of two major banks, Silicon Valley Bank and Signature Bank, at an upcoming hearing that has just been announced by the United States House Financial Services Commission. Legislators are attempting to comprehend the factors that contributed to the failure of these institutions. The hearing is set to take place on March 29, and it will contain evidence from the head of the FDIC as well as the vice chair of supervision for the Fed.

The Silicon Valley Bank was forced to close its doors on March 10 as a result of a run on the bank by its large depositors. The majority of uninsured depositors who had more over $250,000 were covered by the government once they stepped in. On the other hand, it was claimed that Signature Bank did not have any problems with its solvency at the time of its closure on March 12. The FDIC was nonetheless given responsibility of the firm’s insurance procedure by New York’s regulatory authorities.

A report on the supervision and regulation of Silicon Valley Bank by the Federal Reserve is going to be published soon by Michael Barr of the Federal Reserve. According to recent reports, the Department of Justice and the Securities and Exchange Commission have both opened investigations into allegations that some officials at the bank sold shares in the weeks running up to the institution’s shutdown.

Some MPs have indicated that exposure to crypto businesses may have played a part in the failure of the banks, while supporters in the industry have maintained that government officials were attempting to “de-bank” crypto and blockchain enterprises. The House Committee on Financial Services has indicated that it plans to conduct additional hearings about this matter.

It is important to note that Silicon Valley Bank is not connected in any way to Silicon Valley Bank Group, also known as SVB Financial Group. SVB Financial Group is a publicly listed firm that specializes in providing financial services to enterprises in the technology and life science industries. On the other hand, Signature Bank is a commercial bank that provides an extensive range of services and is principally active in the state of New York.

US Officials Consider Expanding Deposit Insurance Coverage

US officials are reportedly studying ways to expand deposit insurance coverage to protect depositors and prevent capital from being pulled from smaller banks to supposedly safer-looking heavyweights. The current deposit insurance cap under the Federal Deposit Insurance Corporation (FDIC) stands at $250,000. However, following the collapse of several banks in March, there have been calls to increase that amount.

Organizations such as the Mid-Size Bank Coalition of America have called for the cap to be lifted for the next two years. They argue that expanding the insurance coverage would provide necessary protection to depositors during these uncertain times.

According to a Bloomberg report on March 21, Treasury Department staff members are currently discussing the possibility of the FDIC being able to expand the current deposit insurance beyond the max cap to cover all deposits. The FDIC has reported that domestic U.S. bank deposits totaled $17.7 trillion as of December 31.

However, such a move would ultimately depend on the level of emergency authority federal regulators have and whether the insurance cap can be increased without formal consent from Congress. Bloomberg’s sources indicated that U.S. authorities do not deem such a drastic move necessary at the moment, as recent steps taken by financial regulators are likely to be sufficient. The potential strategy is being considered just in case the current situation worsens.

In response to recent bank collapses, the Federal Reserve rolled out the $25 billion Bank Term Funding Program (BTFP) on March 13 to stem any further contagion. This move by the government is an attempt to maintain stability in the financial system and restore confidence in banks.

Meanwhile, in a March 20 press briefing, White House Press Secretary Karine Jean-Pierre was asked about the federal government’s view on expanding FDIC insurance beyond $250,000. Jean-Pierre emphasized that the government’s focus is on ensuring the stability of the financial system and creating a fair playing field for all banks. She also highlighted that recent actions taken by the government have instilled confidence in the public regarding their deposits, stating that “Americans should be confident of their deposits. We’ll be there when they need them.”

While the current situation may not require such a drastic move, the possibility of expanding deposit insurance coverage beyond the current cap is being considered. The government will continue to monitor the situation and take necessary steps to ensure the stability of the financial system.