Lawmakers, academics, and the financial industry are discussing whether the FDIC limit of securing bank deposits up to $250,000, needs to be increased or abolished altogether.
A coalition of midsize banks has called on FDIC to insure all deposits for at least two years.
Four US lawmakers have said that they would consider raising the limit.
The debate has taken place as a result of a fear that as the number of US banks that fail increases, depositors could cause a run on remaining banks by withdrawing their uninsured funds in a search for government protection.
The Reuters reports that four US lawmakers, involved in banking matters, have said they would consider whether an extension of the federal insurance limit for bank deposits is necessary to stem a financial crisis due to a drain of large deposits from smaller and regional banks.
"I think that lifting the FDIC insurance cap is a good move," said Senator Elizabeth Warren.
She believes policymakers must determine a new, higher level but says she doesn't know whether $2m, $5m, or $10m would be the right amount.
On the other hand, Axios reports a coalition of midsize banks is urging the FDIC to insure all deposits for at least two years.
In a statement, the group said the measure would "act as a stabilizing factor during this time of economic uncertainty and ensure that public confidence is maintained in one of the most trusted and secure components of the nation's financial system".
The coalition also asked the FDIC to lift rules creating disincentives for small banks to take deposits above the $250,000 per depositor limit by borrowing from the central bank at a rate that is punitive.
Maxine Waters, ranking member of the House Financial Services Committee, has told the NYT that it was time to review raising the FDIC limit under the current circumstances: "As the banking industry continues to consolidate and megabanks become larger, raising the deposit insurance limit is something that Congress should contemplate…If customer confidence in banks is undermined, then we have a real crisis."
The articles show how the debate about the FDIC insurance limit has intensified from different perspectives.
While lawmakers are considering raising the limit, midsize banks are seeking FDIC to insure all deposits for two years.
Maxine Waters believes that, given the current circumstances, it is time to consider reviewing the limit.