US Treasury Secretary Yellen testimony in of a Senate Finance Committee hearing.
- told senators that government refunds of uninsured deposits will not be extended to every bank that fails, only those that pose systemic risk to the financial system
- Republican Sen. James Lankford of Oklahoma pressed Yellen about how widely the uninsured deposit backstops will apply across the banking industry. “Will the deposits in every community bank in Oklahoma, regardless of their size, be fully insured now?” asked Lankford. “Will they get the same treatment that SVB just got, or Signature Bank just got?”
- Yellen acknowledged they would not. Uninsured deposits, she said, would only be covered in the event that a “failure to protect uninsured depositors would create systemic risk and significant economic and financial consequences.”
- Lankford said the impact of this standard would be that small banks would be less appealing to depositors with more than $250,000, the current FDIC insurance threshold.
