The Republican House Freedom Caucus said in a statement Monday that it is opposed to universal bank deposit guarantees over current Federal Deposit Insurance Corporation limit of $250,000 per account.
“The House Freedom Caucus continues to stand for the forgotten men and women of America, and Americans are done with government bailouts — especially when caused by the government’s own policies, apparent regulatory failures, and clear management ineptitude,” Monday’s statement said. “Out-of-control spending in Washington and Federal Reserve interventions have fueled skyrocketing inflation. Having mismanaged interest rate policy and their own balance sheet, the Federal Reserve reacted by rapidly increasing interest rates after keeping them artificially low for far too long. The Federal Reserve set the conditions for this crisis and out-of-control D.C. spending lit the fuse.”
The statement said the group “remains fully committed to ending out-of-control spending in Washington” which it said led to high inflation and the current banking “turmoil.”
“Furthermore, Members of the House Freedom Caucus oppose any universal guarantee on bank deposits over the current limit, as well as any attempt to force unnecessary, burdensome regulations or costs onto small and mid-sized banks (and their customers) who are at no fault in this crisis,” the statement said.
The statement from the Republican side came after Sen. Elizabeth Warren, D-Mass., said during a televised interview on Sunday that the limits of protected deposits should be increased in the wake of the recent failures of Silicon Valley Bank and Signature Bank.
“We have to do this because these banks are under-regulated,” The Hill reported Warren saying on CBS’s “Face the Nation.” “And if we lift the cap, we are relying even more heavily on the regulators to do their jobs.”
The California bank collapsed March 10 after suffering a $1.8 billion loss coming from its bond investments that lost money when interest rates rose, USA Today reported March 14.
In an effort to shore up the banking industry and reduce the risk of other banks failing, the FDIC, U.S. Treasury, and Federal Reserve, put out a statement two days later that all deposits, even those above the $250,00 FDIC limit, would be guaranteed.
“Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system,” the joint statement by the organizations said. “This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth.”
The financial organizations also guaranteed the deposits of Signature Bank in New York.
“All depositors of this institution will be made whole,” the statement said. “As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.”
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