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April 11, 2023

Growing Banking Crisis Means Consumers Need Stronger Protections Against False and Confusing Deposit Insurance Claims More Than Ever

WASHINGTON, D.C.— Stephen Hall, Better Markets’ Legal Director and Securities Specialist, issued the following statement on a comment letter filed with the Federal Deposit Insurance Corporation (“FDIC”) on its proposal to fight consumer confusion and false claims surrounding deposit insurance:

“In the wake of failures at Silicon Valley Bank, Silvergate, and others, consumers are experiencing growing uncertainty about the safety of their money in their bank accounts, and whether the banks insure their deposits against losses. Making matters worse, we’ve seen a wave of abuses involving misleading claims surrounding deposit insurance, largely from crypto firms that want to lull investors into a false sense of security so they’ll be more willing to part with their money.  When these firms go under, consumers often learn the painful truth that their funds weren’t protected.  These trends are contributing to large financial losses and also undermining confidence in our banking system.

“This proposal from the FDIC represents an important step toward better informing and protecting consumers when it comes to the safety net they expect from banks offering deposit insurance.  But as we detail in our comment letter, it must go further by cracking down on unscrupulous firms that deceive consumers outright or through deliberately vague statements regarding deposit insurance.  Recent history shows that public warnings coupled with a string of cease-and-desist orders won’t change the behavior of firms that are bent on deceiving investors with the comforting but false belief that their assets will be insured by the federal government.

“The rule would update the requirements governing signage and advertising across all banking channels, including automated teller machines and digital channels.  And it would define crypto-assets as non-deposit products and clarify the circumstances under which statements or omissions would constitute misrepresentations under existing law.

“More is still needed.  We urge the FDIC to include a presumption that any references to or suggestions of deposit insurance in an advertisement, web page, or other communications for digital assets are false or misleading.  The final rule must also require firms to make a clear, conspicuous, and unqualified declaration that an account will be or will not be protected by pass-through insurance—they need to put up or shut up.  And the FDIC must put the digital asset sector on notice that further violations will be met with harsh civil penalties, injunctive relief, and criminal referrals wherever the facts warrant.”

Read our full comment letter here.


Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit

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