New York (CNN Business)The Federal Deposit Insurance Corporation on Thursday called on Newsmax, a conservative media outlet, to issue a correction and stop publishing advertisements with a false claim from a precious metals trader.
The request came after the FDIC demanded the company, Monetary Gold, “stop and correct its misleading advertising that falsely claims consumers’ FDIC-insured deposits are at risk of forfeiture.”
“The FDIC is separately calling upon Newsmax.com to stop publishing these misleading ads and to issue a correction to its readers following its publication of ‘Walls Street’s Worst Nightmare,'” the FDIC said in a press release.
In the March 17 email advertisement cited by the FDIC, Monetary Gold said that federal law allowed banks to seize money from checking, savings, and other accounts and “use those funds when necessary to keep itself, the bank, afloat.”
“These assertions are false,” the FDIC said. “Federal law is clear that in the unlikely event of a bank failure, customers’ insured deposits would be fully protected up to the $250,000 limit.”
In addition to a website, Newsmax Media also has a print magazine and a cable news channel called Newsmax TV.
Chris Ruddy, the chief executive officer of Newsmax, did not respond to requests for comment on Friday. A representative for Monetary Gold also did not respond to a request for comment.
Brian Sullivan, a spokesperson for the FDIC, told CNN Business on Friday that, thus far, NewsMax has been “unresponsive” to the federal agency.
Sullivan said the FDIC has reached out to NewsMax through email, phone calls, and voicemails.
“In response, crickets,” Sullivan said.
Advertisements that aim to frighten Americans about the security of their money in major financial institutions would likely have a heightened effect this week, given the fear generated by the coronavirus crisis.
The FDIC, formed during the Great Depression, is responsible for protecting depositors from bank runs. The agency insures trillions of dollars in banks across the United States. The FDIC’s insurance fund is backed by the credit of the federal government.
Regulators are trying to keep panicked Americans from making bank runs during the coronavirus pandemic that would add more stress to a banking system already bracing for a potentially severe economic recession.
It could even in theory cause some shortages of physical cash in certain bank branches.
Regulators have stressed that unlike in 2008, America’s banks are very strong today. They’ve been forced to bulk up on capital that can cushion losses caused by defaults and foreclosures. Furthermore, banks have been banned from some of the extreme risk-taking that led to the 2008 crisis.
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