There are bailouts of depositors of Silicon Valley Bank (SVB) and Signature Bank using taxpayer money because “when the FDIC loses Money, they hurt government debt and the government’s balance sheet.And the bailouts of “big companies” that have deposits with the SVB come on the heels of the Fed’s failure to exercise its regulatory power.
Klein said, “The rescue plan[s] What happened to Silicon Valley and Signature Bank was really about bailing out big companies that had accumulated huge exposures in a bank that was nothing like your average Main Street bank. See, most banks the size of Silicon Valley have about 1,000 branches. Silicon Valley Bank has 16 branches. This was a commercial bank, not a people’s bank.”
Then co-host John Berman asked, “Why do you keep calling it a bailout?”
Klein replied, “So, first thing, first, there’s taxpayer money here. The Deposit Insurance Fund that the FDIC uses, it’s true that it’s a valuation of the banks, it’s also true … that that’s on the government’s balance sheet. That’s government money. When The banks – when the FDIC loses money, it hits the government’s debt and the government’s balance sheet. And so, you have to be honest with the American people. It’s not politically popular. Nobody supports the bailout until they’re on a boat that causes a leak. And so, every These companies that have uninsured deposits, and they knew they were uninsured, they’re so thankful that the government bailed them out for a bank that was actually in a lot of trouble.And that’s the same government, the Federal Reserve that regulates this bank [was] Completely asleep when switching in letting the bank fall and finding himself in this position. But you have to be honest here, that’s taxpayer money going to uninsured bank depositors, usually large corporations and corporations, who otherwise might have had a small loss because they were uninsured creditors. Instead, Uncle Sam will make it perfect.”
He added that the SVB was “a complete failure in banking supervision. So, during the financial crisis, we had a lot of different regulators in America and they all pointed fingers at each other saying it was in this part of the company and that part of the company, et cetera. Toe by the Fed. They had a lot of power, the power given to them in the Dodd-Frank bill that we worked on in the Obama administration, and they messed it up. And there were clear red flags, huge growth in assets, … uninsured depositors of hot money institutions running flight risk, massive exposure to unprotected interest rate risk in buying cheap Treasuries and mortgages two years ago. And that’s just — it’s not yet clear — I really hope people are held accountable here, particularly the regulators, the Federal Reserve who oversaw this bank, and it wasn’t a gold-rule bank.”
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