Nichols: Deposit insurance changes must not create competitive disadvantages

In a keynote address to bankers this morning at the 2023 American Bankers Association Washington Summit, ABA President and CEO Rob Nichols addressed the recent failures of Silicon Valley Bank and Signature Bank, urging the industry to remain united in the face of what he called an “idiosyncratic liquidity disruption” at these institutions.

“These banks and their business models were not typical of the thousands of other banks that operate within this country,” Nichols said. “There was a particular and unusual combination of factors at play in both of these failures, related to their portfolios, customer concentration and their risk management in a rising rate environment. I want to state—emphatically—that regardless of what Americans might be hearing or reading on the internet, they can be confident in the overall American banking system.”

Nichols called for a “serious discussion” regarding the future of deposit insurance, calling on policymakers to proceed carefully and deliberately as they contemplate potential changes. He emphasized that “any changes to deposit insurance must ensure a level playing field for competition among banks of all sizes.”