Deposit insurance should prevent bank runs, not just react to them
May 12, 2026
The lesson of 2023 is not that emergency powers worked. It is that they were needed at all.
Emergency tools matter. In March 2023, regulators used extraordinary authorities to contain a rapidly unfolding situation.
Without them, the outcome could have been far worse. But treating emergency powers as a substitute for reform confuses crisis response with system design. A modern financial system requires both crisis response and crisis prevention. The former stops panic once it begins. The latter reduces the likelihood that panic starts in the first place.
The structural issue is straightforward. The accounts most prone to flight — large, non-interest-bearing business operating balances — are also the least protected under the current framework. These are not speculative funds. They are payroll accounts, vendor payments and working capital. They exist because businesses must operate, not because they are seeking yield.
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Corporate Communications
Deb Vrana, Chief Communications Officer
deb.vrana@bancofcal.com
213-999-4141
Jenn Saylors, SVP of Corporate Communications
jenn.saylors@bancofcal.com
213-338-8635