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The Mid-Size Bank Coalition of America worries that failure of another regional lender would lead many depositors to move their money to the nation's largest banks, regardless of the underlying health of their bank.

These are the events that led up to the bank's $3.25 billion government-driven sale to UBS Group AG.

"Nobody wants to be systemic when it comes time for regulation, and everybody wants to be systemic when it comes time for bailouts."

In February, housing costs helped deliver a larger-than-forecast 0.5% gain in so-called core inflation, which excludes food and energy

While the Fed promises to "fully protect all depositors," some question the moral hazard of protecting banks from the effects of poor decision-making.

"Central banks have become a source of macro volatility, rather than a dampener," says one economist.