In the wake of the sudden collapse of Silicon Valley Bank and Signature Bank, US President Joe Biden addressed the nation to reassure Americans that the banking system is safe.[0] Treasury Secretary Janet Yellen echoed Biden’s assurances, speaking before the Senate Finance Committee on Thursday.
“Our banking system remains sound,” Yellen said.[1] People in the United States can trust that their funds will be available when needed.
In an effort to further strengthen the banking system, the largest US banks are pouring $30 billion into First Republic Bank.[1] JPMorgan Chase, Bank of America and Citigroup are each expected to inject $5 billion, while other institutions are contributing smaller amounts.[2]
“It’s important to note, President Biden does nothing at 9 a.m.[3] He is a night owl,[5] said former White House press secretary Jen Psaki. [5]So, the fact that he is doing this at 9 a.m. anyway speaks to how vital the White House recognizes it is for him to have his voice out there.[4][5]
[5]Americans can rest assured that our banking system is safe. Your funds are secure.[6] I can assure you that we will not be content with this and will continue to strive We’ll do whatever is needed,” Biden added.
According to S&P Global Ratings, 68% of First Republic’s deposits are uninsured by the Federal Deposit Insurance Corporation as they exceed the $250,000 limit.[7] This means these deposits are “most susceptible to withdrawal”.
Biden also stated that “no losses will be borne by the taxpayers”, and that the money will come from the fees that banks pay into the Deposit Insurance Fund.[6] He also said investors in the banks will not be protected, as they “knowingly took a risk”.[8]
The Federal Deposit Insurance Corporation (FDIC) provides insurance protection for deposits up to $250,000 per depositor, per ownership category, per FDIC-insured bank.[9] This means if a bank fails, you’re protected up to the $250,000 limit.[10] It’s important to remember that money deposited into bank accounts will be safe as long as the financial institution is federally insured.[9]
The actions of the federal government this weekend to shore up Silicon Valley Bank’s depositors have been labeled a bailout by some experts.[11]
0. “Biden outlines consequences for SVB and Signature Bank executives” CNN, 13 Mar. 2023, https://www.cnn.com/videos/business/2023/03/13/president-biden-silicon-valley-bank-signature-collapse-remarks-cnntm-vpx.cnn
1. “Big lenders plan to inject billions of dollars into embattled First Republic Bank” POLITICO, 16 Mar. 2023, https://www.politico.com/news/2023/03/16/big-lenders-to-inject-billions-of-dollars-into-first-republic-bank-00087451
2. “11 banks sweep in with a $30 billion rescue of First Republic Bank” NPR, 16 Mar. 2023, https://www.npr.org/2023/03/16/1163958533/first-republic-bank-silicon-valley-bank-signature-bank-bank-run
3. “‘Sleepy Joe’: Advisor confirms Biden ‘does nothing at 9am’” Sky News Australia, 15 Mar. 2023, https://www.skynews.com.au/opinion/chris-kenny/sleepy-joe-advisor-confirms-biden-does-nothing-at-9am/video/f0b80e20a9ecf749243309e3d7ebeeda
4. “Twitter explodes after former Biden spox praises president for working at 9 am” Yahoo Life, 14 Mar. 2023, https://www.yahoo.com/lifestyle/twitter-explodes-former-biden-spox-165518485.html
5. “Biden Looks to Reassure Nervous Customers That U.S. Banks Are Safe” U.S. News & World Report, 13 Mar. 2023, https://www.usnews.com/news/national-news/articles/2023-03-13/biden-looks-to-reassure-nervous-customers-that-u-s-banks-are-safe
6. “Haley attacks Biden over ‘bailout’ of Silicon Valley Bank” The Hill, 13 Mar. 2023, https://thehill.com/business/banking-financial-institutions/3897971-haley-attacks-biden-over-bailout-of-silicon-valley-bank
7. “First Republic Stock Crashes To All-Time Low: What To Know About The Latest Bank On The Brink” Forbes, 16 Mar. 2023, https://www.forbes.com/sites/dereksaul/2023/03/16/first-republic-stock-crashes-to-all-time-low-what-to-know-about-the-latest-bank-on-the-brink/
8. “Inside Biden’s SVB move to stop future bank runs” Axios, 14 Mar. 2023, https://www.axios.com/2023/03/14/biden-svb-stop-bank-runs
9. “Bank failures: A list of failed banks” Business Insider, 15 Mar. 2023, https://www.businessinsider.com/personal-finance/list-of-bank-failures
10. “How does FDIC insurance work? Silicon Valley Bank implosion” Fortune, 13 Mar. 2023, https://fortune.com/2023/03/13/how-does-fdic-insurance-work-silicon-valley-bank-implosion/
11. “Bank collapses are a reckoning for Team Biden’s sheer economic incompetence” New York Post , 13 Mar. 2023, https://nypost.com/2023/03/13/as-banks-headed-for-crisis-team-biden-focused-on-prescribing-wokery/