excalibur
Diamond Member
- Mar 19, 2015
- 18,166
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In the end, where does Biden get the authority to order this?
www.washingtontimes.com
...
Although Mr. Biden insisted to taxpayers that the uninsured deposits will be covered by the DIF, Republicans and some economists remained skeptical. The DIF is funded by fees from banks as well as the government’s earnings on interest from bank investments in Treasury securities and bonds.
It currently holds $128 billion, which a Treasury official said was “more than fully sufficient” to cover depositors at the collapsed Silicon Valley Bank and shuttered Signature Bank.
“No losses will be borne by the taxpayers. Instead, the money will come from the fees the banks pay into the Deposit Insurance Fund,” Mr. Biden said.
Republicans and some economists said they don’t see how taxpayers won’t end up bailing out the wealthy customers of both bank. Silicon Valley Bank and Signature Bank have uninsured customer deposits that far exceed the funds in the DIF.
The FDIC insures only the first $250,000 in deposits in covered accounts, which include almost all savings and checking accounts.
Any amount over that — and all but the smallest of small-business accounts will have more than $250,000 — is uninsured. Cryptocurrency and accounts such as stock or bond investments also are categorically excluded from FDIC coverage.
Silicon Valley Bank had $173 billion in total deposits, and the vast amount — roughly $152 billion — was not covered by the FDIC, according to regulatory filings.
Meanwhile, more than $79 billion of $88 billion in total deposits at Signature Bank was uninsured at the end of last year, regulatory filings show. Combined, that’s a whopping $240 billion in uninsured deposits that the government must pick up — nearly twice the $128 billion in the DIF.
Treasury officials said any losses to the DIF would be repaid in full by raising fees on the system’s banks. Additionally, the Treasury Department’s Exchange Stabilization Fund will provide $25 billion to backstop the Fed’s loan program.
Still, the banks now being charged higher fees by the FDIC will likely pass those costs on to consumers in the forms of higher costs, reduced service, and increased ATM or overdraft fees.
“The public is always on the hook for any Fed program, no matter how much government insists costs won’t be borne by taxpayers,” former Rep. Justin Amash, Michigan independent, said on Twitter.
Even so, Republicans and some economists say that’s not enough for the DIF to cover the losses incurred by Signature and Silicon Valley Bank.
“Joe Biden is pretending this isn’t a bailout. It is. Now depositors at healthy banks are forced to subsidize Silicon Valley Bank’s mismanagement. When the Deposit Insurance Fund runs dry, all bank customers are on the hook. That’s a public bailout,” said former South Carolina Gov. Nikki Haley, now a Republican presidential hopeful.
Ms. Haley said depositors should be covered by selling off Silicon Valley Bank’s assets, not through the public.
Sen. Tim Scott of South Carolina, the top Republican on the Senate Banking Committee, said the emergency moves encourage reckless investments by banks because now banks will expect government protection.
...
Although Mr. Biden insisted to taxpayers that the uninsured deposits will be covered by the DIF, Republicans and some economists remained skeptical. The DIF is funded by fees from banks as well as the government’s earnings on interest from bank investments in Treasury securities and bonds.
It currently holds $128 billion, which a Treasury official said was “more than fully sufficient” to cover depositors at the collapsed Silicon Valley Bank and shuttered Signature Bank.
“No losses will be borne by the taxpayers. Instead, the money will come from the fees the banks pay into the Deposit Insurance Fund,” Mr. Biden said.
Republicans and some economists said they don’t see how taxpayers won’t end up bailing out the wealthy customers of both bank. Silicon Valley Bank and Signature Bank have uninsured customer deposits that far exceed the funds in the DIF.
The FDIC insures only the first $250,000 in deposits in covered accounts, which include almost all savings and checking accounts.
Any amount over that — and all but the smallest of small-business accounts will have more than $250,000 — is uninsured. Cryptocurrency and accounts such as stock or bond investments also are categorically excluded from FDIC coverage.
Silicon Valley Bank had $173 billion in total deposits, and the vast amount — roughly $152 billion — was not covered by the FDIC, according to regulatory filings.
Meanwhile, more than $79 billion of $88 billion in total deposits at Signature Bank was uninsured at the end of last year, regulatory filings show. Combined, that’s a whopping $240 billion in uninsured deposits that the government must pick up — nearly twice the $128 billion in the DIF.
Treasury officials said any losses to the DIF would be repaid in full by raising fees on the system’s banks. Additionally, the Treasury Department’s Exchange Stabilization Fund will provide $25 billion to backstop the Fed’s loan program.
Still, the banks now being charged higher fees by the FDIC will likely pass those costs on to consumers in the forms of higher costs, reduced service, and increased ATM or overdraft fees.
“The public is always on the hook for any Fed program, no matter how much government insists costs won’t be borne by taxpayers,” former Rep. Justin Amash, Michigan independent, said on Twitter.
Even so, Republicans and some economists say that’s not enough for the DIF to cover the losses incurred by Signature and Silicon Valley Bank.
“Joe Biden is pretending this isn’t a bailout. It is. Now depositors at healthy banks are forced to subsidize Silicon Valley Bank’s mismanagement. When the Deposit Insurance Fund runs dry, all bank customers are on the hook. That’s a public bailout,” said former South Carolina Gov. Nikki Haley, now a Republican presidential hopeful.
Ms. Haley said depositors should be covered by selling off Silicon Valley Bank’s assets, not through the public.
Sen. Tim Scott of South Carolina, the top Republican on the Senate Banking Committee, said the emergency moves encourage reckless investments by banks because now banks will expect government protection.
...
Biden’s ‘bailout’ a step toward government control of banking system, economists say
Economists warn that President Biden’s extraordinary action at two collapsed banks is the first step toward government control of the banking system.
www.washingtontimes.com
