The House Freedom Caucus voiced their disapproval on Monday to any increased guarantees on bank deposits, a proposal that has gained traction in recent weeks since the collapse of two major U.S. banks.
Members of the House Freedom Caucus released a statement Monday stating their concerns of “big government bailouts” regarding banks. The caucus, which includes conservative GOP members such as Reps. Lauren Boebert (Colo.) and Scott Perry (Pa.), said in their statement that the banking failure was caused by regulators, not regulations, and that they will oppose increasing Federal Deposit Insurance Corporation’s (FDIC) guarantee of bank deposits, which is currently capped at $250,000.
“The House Freedom Caucus remains firmly committed to ending out-of-control spending in Washington, and the resulting inflation, that lies at the heart of the current turmoil in the banking system,” the released statement read.
“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 continued.
Sen. Elizabeth Warren (D-Mass.) said on Sunday that Congress should lift the cap on federal insurance on bank deposits from $250,000.
“We have to do this because these banks are under-regulated,” Warren said 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 FDIC currently insures deposits of up to $250,000 for each customer, but Warren said last week that this cap was meant for individuals, not for small businesses or nonprofit organizations. The Massachusetts senator also had blamed weakening regulations on banks for the Silicon Valley Bank and Signature Bank collapses that occurred earlier this month, sending the bank and tech industries into a spiral.
The House Freedom Caucus also shifted blame to the Federal Reserve’s decision to raise interest rates as contributing to “skyrocketing” inflation. The members called on the Federal Reserve to “unwind” its Bank Term Funding Program, which was created in the wake of the Silicon Valley Collapse to “help assure banks have the ability to meet the needs of all their depositors.”
“Any universal guarantee on all bank deposits, whether implicit or explicit, enshrines a dangerous precedent that simply encourages future irresponsible behavior to be paid for by those not involved who followed the rules,” the members wrote.