The competition to pay depositors higher rates has been hot for several years, leaving many smaller lenders feeling pressured to raise deposits.
The banks can offer competitive loans to auto customers who might be facing sticker shock, now that the average price of a car is around $50,000.
Bank deposits have been increasing for more than a year, according to the FDIC. While that could let banks make more loans, many banks are being cautious.
Many are struggling with high deposit rates and shaky commercial real estate portfolios. Some seek to bulk up as a solution.
Business owners have taken steps to protect their cash since three regional banks failed last year.
The agency wants the country’s largest banks to split the cost of refilling its coffers. But smaller banks aren’t sure they’re in the clear.
But it needs Congress’s blessing.
For one, help from the FDIC, which will absorb up to 80% of the losses coming from First Republic’s residential and commercial loans.
In the wake of the Silicon Valley Bank debacle, the 1984 failure of Continental Illinois remains relevant.
Besides testifying in hearings, regulators need to get a few messages across, including that the system worked, a PR executive says.
