Yellen says the U.S. is not considering providing a “blanket guarantee” of bank deposits

US Treasury Secretary Janet Yellen told lawmakers on Wednesday that the administration is not considering providing a “blanket guarantee” of bank deposits after the collapse of two major US banks this month.

Some banking groups have urged Congress to temporarily guarantee all deposits, a move they say would avoid a deeper crisis after the failures of Silicon Valley Bank and Signature Bank.

Yellen, speaking before a Senate subcommittee, said she believed changes to FDIC deposit guarantees were “worth looking at” but that raising them beyond the current $250,000 limit was not considered. The FDIC is an American institution that guarantees bank deposits.

“When a bank failure is considered a systemic risk, which I think is the risk of a contagion bank run, (a) we can call the systemic risk exception, which allows the FDIC to protect all deposits,” Yellen said. The Department will determine systemic risks on a case-by-case basis.

Yellen said the government was not looking at “anything related to general guarantees or deposit guarantees.”

Shares of First Republic Bank fell 15.5% to $13.33 after Yellen’s comments.

Yellen told the Senate Appropriations Subcommittee on Financial Services and General Government that she is concerned about contagion from recent bankruptcies at banks across the country and that President Joe Biden’s administration is focused on stabilizing the banking system.