(NewsNation) — After the collapse of Silicon Valley Bank, some senators are suggesting raising the cap on federal insurance on bank deposits, but experts warn of the consequences this could have.
“As soon as the administration of the FDIC rolls out a blanket, complete insurance for everyone, then we’ve kind of erased the capitalism part from banks. And we’ve just made them franchises of the FDIC, so the Federal Reserve with different logos,” said Dan Eberhart.
Eberhart, CEO of Canary, joined “NewsNation Prime,” saying inflation was responsible for the crash.
“The ultimate problem here is inflation. And this just shows folks what too much inflation leads to,” Eberhart said. “And these bank management teams are not used to managing in a an environment where the Fed has raised rates this much.”
However, Dan Roccato, finance professor at University of California San Diego, says raising the cap could provide temporary relief.
“At the end of the day, that cost is going to be paid by the customers. There’s no doubt about it. But I think there is some merit in having that discussion about what is the right limit?” Roccato said on “NewsNation Prime.”
“How do we know, maybe now’s the time to tweak that a bit. Because what we see now is basically a lack of confidence. And confidence is the glue, as you know, that holds this system together.”
Watch Roccato and Eberhart’s analysis in the player above.