Rockland Trust and Others Push for More Government Support

The Mid-Size Bank Coalition of America (MBCA) was formed in 2011. From its original 16 members, the MBCA has grown to represent more than 100 banks, among them Massachusetts-based Rockland Trust (which has two locations in Franklin).

According to reports in Bloomberg news and elsewhere, MBCA and its members want a two-year expansion  of Federal Deposit Insurance Corporation coverage of depositor funds at any amount, not just the first $250,000.

The logic they outlined is that the Fed bailout of Silicon Valley Bank shows that the the government is still wedded to its "too big to fail" doctrine from the last fiscal crisis (though theoretically that wasn't going to happen again). As a result, the MBCA members fear an exodus of depositors to bigger banks that the Federal Government has just demonstrated it will back up entirely...

No less of a champion than the state's senior senator Elizabeth Warren, have been making similar suggestions in recent days. In a report on CBS "Face the Nation" Sunday, Warren was quoted as saying, "I think the lifting the FDIC insurance cap is a good move."

Not much discussed so far is what the impact of having the government taking on all the risk of the banking sector will do for banks and the government's balance sheet.