[M]odern banking...is no longer about safety and security, instead focusing on speculation and trading. It has become impervious to the normal political process; it has consolidated to the point of being anti-competitive, with an enormous size advantage held by the top 10 banks versus smaller and/or non depository competitors...
[T]he solution dawned on me – all it would take is the right person (with the support of their board) sending a simple letter...
[A]s chairman of the FDIC, with the full support of my Board of Governors, [I am informing you that] we have decided upon the following changes:
- Effectively immediately, we have increased the FDIC deposit insurance for any US bank that engages in ANY trading of derivatives or underwriting securities or other investment banking activities by threefold. This 3X fee increase goes into effect immediately. It applies regardless whether these trades are hedges for proprietary trades or are made on behalf of clients.
- Effective in 90 days, we are LOWERING the insured maximum insured deposit liability to $100,000 per account for derivative trading firms. Effective in 180 days, the insured maximum insured deposit liability drops to $50,000 per account.
- Effective in 1 year from today, on May 23, 2016, we will no longer offer deposit insurance for any firm that engages in derivative trading, underwriting securities or engages in Investment banking.
- Any bank with fewer than 10,000 depositors or less than $5 billion in assets may apply for a discretionary waiver of these rules.