Treasury Secretary Janet Yellen admitted in a Senate Finance Committee hearing Thursday that the Federal Deposit Insurance Corporation and the Federal Reserve might not guarantee large deposits at small community banks like they did for a failed California bank.
The vast majority of deposits at Silicon Valley Bank, which offered services to nearly half of the venture-backed technology and healthcare firms in the United States before its collapse last week, exceeded the $250,000 threshold insured by the FDIC. Regulators scrambled to guarantee all deposits at Silicon Valley Bank such that the remainder of the financial system, in which roughly half of deposits surpass $250,000, would remain safeguarded against bank runs.
Sen. James Lankford (R-OK) questioned Yellen about whether uninsured deposits at community banks in his state “regardless of their size” would likewise be “fully insured.” Yellen replied that a bank “only gets that treatment” if supermajorities of board…
