UPDATE 1-Raising FDIC's deposit protection limit should be considered -U.S. Senate majority leader

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WASHINGTON, March 22 (Reuters) - A proposal to raise the Federal Deposit Insurance Corporation's $250,000 limit for protecting depositors' accounts should be considered, but any costs should be paid by the banks, not taxpayers, U.S. Senate Majority Leader Chuck Schumer said on Wednesday.

"Raising the $250,000 FDIC limit is a serious proposal and should be carefully studied," Schumer told reporters at the U.S. Capitol. "It's important because it will strengthen smaller banks and prevent depositors from putting their money into larger banks."

But the issue carried "a moral hazard which could have significant impact on our economy in the long run," Schumer added. "This is not an easy question, and will require careful consideration."

Schumer's comments come as Congress weighs potential action following the recent collapse of two U.S. banks that triggered turmoil in financial markets. (Reporting by Moira Warburton and Costas Pitas; writing by Susan Heavey; Editing by Doina Chiacu and Jonathan Oatis)