Banker: Deposit insurance coverage reform need to concentrate on customer security, self-confidence

Deposit insurance coverage reform need to stay focused on customer security and structure self-confidence in the stability of the banking system, Thomas Fraser, CEO of First Mutual Holding Co. in Lakewood, Ohio, informed the Senate Banking Committee Thursday. Fraser was among 3 witnesses who affirmed prior to the committee throughout a hearing on deposit insurance coverage reform following the current bank failures. In his remarks, the CEO stated that while propositions have actually been provided on ethical risk and who needs to pay of bank failures, customer security and self-confidence need to be “our highest objectives” when reforming the system.

“It has become evident to me that a structural shift in banking is occurring and there’s a range of new emergent risks that did not exist in the ‘08 financial crisis and certainly didn’t exist in 1934… They’re challenging the perimeter of traditional perceptions and mechanics about how our financial system works,” Fraser stated. “It’s imperative that banking policy adapts to these new risks, especially with respect to deposit insurance reforms.”

Among the dangers Fraser recognized were mobile innovation and expert system tools that make deposit bases more susceptible; competitors with nonbank cash market funds that use high rates without FDIC assurances; and an increasing variety of shadow banks and fintechs providing bank-like services. At the very same time, he stated that any reform alternatives need to likewise represent the unintentional repercussions of making policy modifications. Fraser likewise stated that need to a bank end up in FDIC receivership, the resolution needs to think about long-lasting competitive concentrations beyond simply sped up, low-priced resolutions.


A news media journalist always on the go, I've been published in major publications including VICE, The Atlantic, and TIME.

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