Biden Admin Makes Shocking Admission About Banking Crisis

OPINION:  This article contains commentary which may reflect the author’s opinion

The financial dominos are falling as bank after bank falls in not just the United States, but around the world. The Californian Silicon Valley Bank failed last week and after a takeover by the FDIC, First Citizens BancShares is currently evaluating an offer to take SVB over.

Following was the New York Signature Bank failure. SB has now been sold to Flagstar Bank, a subsidiary of New York Community Bank.

Last Thursday, First Republic Bank was “teetering on the brink” as a run on bank funds gave Jamie Dimon, CEO of America’s biggest bank, a scare. Dimon collaborated with US Treasury Secretary Janet Yellon on a plan for a private sector rescue, CNN reported.

The result was an agreement with a group of American lenders to deposit tens of billions of dollars in cash into the First Republic to stave off a collapse.

Lenders involved in saving first Republic included JPMorgan Chase, Bank of America, and Citigroup with 11 others who came up with $30 billion cash infusion.

In Europe, Credit Suisse, a longstanding international bank with a reputation for stability, failed last week and was taken over by the international UBS, which had previously been Credit Suisse’s rival.

But that may not be the end of the financial crisis. Treasury Secretary Janet Yellen said in remarks Tuesday that regulators may ensure all deposits at more banks following the Silicon Valley Bank (SVB) and Signature Bank depositor bailouts.

Yellen said the bailouts were essential to safeguard the U.S. banking system in prepared remarks at the American Bankers Association Tuesday, referencing the Treasury Department and Federal Reserve’s actions in guaranteeing the deposits of SVB’s customers, Daily Caller reported.

“Similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion,” she said. Previously, Yellen had said similar actions would only take place for banks whose failure could pose a threat to the banking system, and that smaller community banks were not included.

“A bank only gets that treatment if a majority of the FDIC board, a supermajority of the Fed board and I, in consultation with the president, determine that the failure to protect uninsured depositors would create systemic risk and significant economic and financial consequences,” Yellen said.

“Treasury is committed to ensuring the ongoing health and competitiveness of our vibrant community and regional banking institutions,” Yellen said, according to CNBC.

U.S. officials are examining possible methods to increase Federal Deposit Insurance Corp. (FDIC) coverage to more deposits as a way to stave off a possible financial crisis, according to Bloomberg. Staff in the Treasury Department are evaluating if federal regulators possess sufficient emergency authority to temporarily insure all deposits over the $250,000 limit existing on most accounts, following the steps taken to cover SVB and Signature Bank depositors.

As of now, authorities do not believe this move is essential, but they are working on a strategy in case circumstances devolve, according to Bloomberg. “Since our administration and the regulators took decisive action last weekend, we have seen deposits stabilize at regional banks throughout the country and, in some cases, outflows have modestly reversed,” White House spokesman Michael Kikukawa said, not acknowledging if this step is being investigated.

Arkansas Senator Tom Cotton accused the Biden administration of playing a part in the banking failures. Speaking on Fox News’s “Sunday Morning Futures” the senator said the policies implemented under the current administration are to blame for the failure of SVB.

“It was Joe Biden’s reckless spending that created runaway inflation, which led to higher interest rates, which put the squeeze on banks like Silicon Valley Bank, and it was Joe Biden’s administration that didn’t properly oversee and supervise a bank like Silicon Valley Bank six months or a year ago to make sure they were doing proper risk management of the interest rate spreads between deposits on the one hand and assets on the other hand,” he said.

Cotton also alleged that the Biden administration would not have bailed out conservative banks. “It’s obvious to everyone that Joe Biden would not have bailed out a bank in midland Texas that banked, almost exclusively, the oil and gas industry”.

It is interesting to note that the Silicon Valley Bank was heavily invested in the tech industry, notably in Chinese start-ups that are borrowing money from SVB because they were turned down in accessing the funds from sources in China.

Cotton continued, “What we got instead was the Biden bank bailout which will, in fact, be going to Chinese companies because it’s well-known that Silicon Valley Bank was an access point for Chinese companies to get American money.”

Former UN ambassador Nikki Haley tweeted, “Private investors can purchase the bank and its assets. It is not the responsibility of the American taxpayer to step in.”



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