Surveillance: Small Banks Keep Falling Into Cracks Opened by Fed

“What’s important here is we do need policy responses at this stage,” said Mayra Rodriguez Valladares of MRV Associates, a former analyst at the New York Fed. One idea: Have the Federal Deposit Insurance Corp. step up with higher coverage limits (and have big banks pay the freight).

Monetary policy is trickier. “We’re still at rates that are the highest in 15 years, she said. “It’s not like you can just turn off the spigot. My biggest fear is we’re already starting to turn from an interest-rate risk story to a credit-risk story.”

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