In the aftermath of Silicon Valley Bank's failure earlier this month, the Federal Reserve announced it was further increasing its support for commercial banks, creating a plan that effectively backstopped all deposits, insured and uninsured, across the U.S. financial system. Banks with accounts with the Fed enjoy a number of perks like higher interest rates and instant transfers not available to average Americans and businesses, but one proposal could change that by creating a “public banking option,” potentially helping millions of people.
In 2020, Sen. Sherrod Brown, D-Ohio, introduced a bill to create “FedAccounts” as part of the response to the COVID-19 pandemic. It didn’t go anywhere at the time, but under Brown’s proposal, anyone who opened up the account would receive a debit card, online account access, automatic bill-pay and mobile banking, as well as access to ATMs at post offices.