The House of Representatives Freedom Caucus said in a statement on Monday that they oppose bailing out the banking industry for what should be seen as a failure of regulators not to anticipate the next crisis.
“The House Freedom Caucus continues to stand with America’s forgotten men and women, and Americans end up with government bailouts — especially when they are caused by the government’s own policies, apparent regulatory failures, and apparent management incompetence,” the group of conservative House lawmakers said in a statement. written.
House conservatives argued that excessive spending under President Joe Biden and “mismanaged” monetary policy by the Federal Reserve created the conditions for the banking crisis that began with the collapse of Silicon Valley. They also called on the Federal Reserve to end the Bank Term Financing Program, a program creature by the Federal Reserve to ensure banks can meet depositors’ needs, although some critics might call it a bailout.
Washington’s out-of-control spending and Federal Reserve interventions have sent inflation soaring. Having mismanaged its interest rate policy and balance sheet, the Federal Reserve reacted by quickly increasing interest rates after keeping them artificially low for too long. The Federal Reserve set the terms for this crisis and out-of-control capital spending ignited the fuse.
The Federal Reserve should cancel the extraordinary Bank Term Funding Program as soon as possible. Any blanket guarantee on all bank deposits, whether implied or express, sets a dangerous precedent that simply encourages irresponsible future behavior to be paid for by those uninvolved who follow the rules.
Lawmakers wrote that this crisis was also born from the failure of regulators, not from regulations. They said they would oppose Democrats’ efforts to roll back Trump’s banking reform that repealed Dodd-Frank regulations for small and medium-sized banks.
In fact, the San Francisco Federal Reserve Bank has done just that Become A political target for Democrats and Republicans, both of whom asserted that the San Francisco Fed failed to address the “risky structure” of Silicon Valley’s bank, as Sen. Ted Cruz (R-Texas) pointed out.
John Nolte of Breitbart News explained how Treasury Secretary Janet Yellen acknowledged the existence of a two-tiered system in banking, where large banks seem to get unlimited protection, while smaller, community-based banks don’t offer the same level of protection.
In response to questioning by Senator James Lankford, Yellen admitted that as the government responds to the banking crisis, large depositors are more likely to go to larger institutions that will have government support over smaller banks, which will not have government protection.
“Look, I mean, that’s definitely not something we’d encourage,” Yellen said.
During a Senate Finance Committee hearing, Yellen said that Chinese investors affiliated with the Chinese Communist Party might be included as part of the government’s bailout for the Silicon Valley bank:
Democrats want to make all banks “too big to fail” and will drive more consolidation in the financial sector. The Freedom Caucus statement concluded that no bank should be “too big to fail”.
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