Raising FDIC limit may not spark broad rally for stocks, says Barclays

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There's no evidence higher FDIC insurance would spark a big jump for stocks even as markets cheer government support for bank deposits, says Barclays

, the top Democrat on the House Financial Services Committee, said Congress should think about bumping up the limit.said as a rookie, he spread his money across a number of banks because of the FDIC's insurance limit.

"In the immediate aftermath of the limit increase, S&P experienced wildly different paths, suggesting that raising the limit was not always successful in soothing the equity market," Gupta wrote. "However, there's no evidence that the limit raise itself catalyzed the move. Indeed, the eventual relief rally is in line with what is expected given the magnitude of the fallout preceding the insurance cap lift," Gupta said.

 

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