Banking Crisis Prompts US Government to Consider Emergency Powers To Get Around Legal Constraints

The U.S. is in the midst of a banking crisis. There has been expected fallout from the collapse of Silicon Valley Bank. This has prompted U.S. officials to start searching for ways they might temporarily expand Federal Deposit Insurance Corp. coverage to all deposits, a move sought by a coalition of banks.While they are stressing that it’s needed to head off a potential financial crisis, some observers are wary of such a move.Insider sources told Bloomberg that the Treasury Department is reviewing whether federal regulators have enough emergency authority to temporarily insure deposits greater than the current $250,000 cap on most accounts without formal consent. This proposal has divided Congress.“We will use the tools we have to support community banks,” White House spokesman Michael Kikukawa said. “Since our administration and the regulators took decisive action last weekend, we have seen deposits stabilize at regional banks throughout the country and, in some cases, outflows have modestly reversed.”The Federal Reserve will close its two-day meeting today, March 22, and all eyes are on what Federal Reserve Chairman Jerome Powell will say and do about the banking crisis.Three lenders–Silvergate, Signature Bank and Silicon Valley Bank— have collapsed this month when uninsured depositors pulled...