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The U.S. Federal Reserve, Treasury Department, and the FDIC are exploring a potential guarantee of all bank deposits in the U.S. It will make the FDIC temporarily insure deposits beyond the current $250,000 limit on most accounts, without having to get approval from the U.S. Congress.
As the banking crisis continues despite efforts by the U.S. government and regulators, a total of $18 trillion in deposits would be guaranteed if the crisis expands. The FDIC, Fed, and Treasury Dept have earlier ensured that taxpayers will not pay for this crisis.
While the authorities don’t see the move necessary as they believe the banking sector is safe, but First Republic Bank tumbling 47% on Monday signaled the need for efforts to prevent the spread of contagion.
Meanwhile, traders await the FOMC rate hike decision on March 22 to see if the Fed is really dovish and go with zero or 25 bps. Economists, businesspeople, and crypto influencers have warned the U.S. Fed of worsening market conditions.
Billionaire Bill Ackman took to Twitter to share his concerns about the worsening banking crisis ahead of the FOMC meeting. He believes the Fed should pause due to a number of major shocks to the system after three US bank closures in a week, the demise of Credit Suisse, and the zeroing of its junior bondholders.
Tesla CEO Elon Musk replied to Bill Ackman, saying “Fed needs to drop the rate by at least 50bps on Wednesday.” He also believes that the FDIC must increase the current $250,000 limit to prevent bank runs. Musk and several other crypto influencers last year warned the Fed of rate hikes to increase recession risk.
Economist Peter Schiff also blamed the U.S. Fed and FDIC for the current banking crisis in the U.S. In fact, he thinks banks were performing well prior to the FDIC and inflation will destroy the value of all bank deposits, saying “$18 trillion in deposits insured by $100 billion in Treasuries.”
The U.S. banking system is currently insolvent thanks to the Fed and FDIC. Banks where much sounder under a gold standard and prior to the FDIC. $18 trillion in deposits "insured" by $100 billion in Treasuries. The value of all bank deposits will soon be destroyed by inflation.
— Peter Schiff (@PeterSchiff) March 21, 2023
Bitcoin Price Stays Strong Near $28,000
Bitcoin price is currently trading at $27,506, down over 1% in the last 24 hours as investors await the Fed rate hike decision. BTC price will hit the $30,000 mark if the Fed decides to pause the rate hike on Wednesday amid bank woes.
According to CME FedWatch Tool, there’s a 25.5% probability of no rate hike by the Fed and a 74.5% probability for a 25 bps rate hike.
Also Read: Amid Bitcoin Price Rally, BTC Funds See Major Outflows, This Cohort Is Booking Profits
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