Federal officials are apparently looking into methods to strengthen deposit safeguards in order to avert a financial crisis.
According to Bloomberg News, Treasury Department personnel are investigating whether regulators have the right to temporarily guarantee deposits over the typical $250,000 limit without Congressional permission.
According to the article, which cites people familiar with the situation, officials do not consider such a step necessary but are developing a strategy in case the financial crisis deepens.
The problems in the banking sector arise from the bankruptcy of Silicon Valley Bank earlier this month, followed by the failure of Signature Bank.
“There has been strong interest from numerous parties, and the FDIC and bidders require further time to investigate all possibilities in order to maximize value and reach an ideal solution,” the FDIC stated in a news statement Monday.
First Citizens Bank, which has taken up 20 bankrupt banks in the previous 14 years, is one of the potential bidders.
In terms of the potential enlarged FDIC insurance plan, Bloomberg reports that one option being explored is leveraging the Treasury Department’s ability to take emergency action and draw into the Exchange Stabilization Fund.
