Trump's FDIC cuts raise alarms about future banking stability

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The Trump administration's in-depth budget cuts hit the Federal Deposit Insurance Corporation (FDIC), raising concerns about the agency's ability to oversee banks and prevent financial crises. More than 170 FDIC employees were fired this month, and another 500 were accepted for deferred resignation. In addition, the work discounts for 200 bank examiners who monitor financial institutions were also cancelled. Despite these cuts, the FDIC did not receive taxpayer funding, but operated on fees paid by banks. Financial experts warn that weakening the FDIC could increase the risk of future bank failures. The agency has been working to prevent the 2023 signature bank crash, and later admitted it lacks enough qualified examiners to capture warning signs. Critics say the cuts are in line with Trump’s broader deregulation agenda, similar to the 2025 project recommendations, which is a conservative policy blueprint. The report even shows that some of Trump's advisers are considering removing the FDIC completely. Elizabeth Warren said cutting threats to financial stability, while financial risk adviser Mayra Rodríguez Valladares warned: “This administration is sowing seeds for the next financial crisis.” Trump's new FDIC chairman Travis Hill said pushing fewer regulations could make it easier for non-bank institutions, including cryptocurrency companies, to enter the market. With the reduction of resources and reduced oversight, many fear that the FDIC will not be enough to cope with the next financial downturn.

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