HomeUS NewsBiden Admin Makes Shocking Admission About Banking Crisis

Biden Admin Makes Shocking Admission About Banking Crisis

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The financial dominoes are tumbling as one bank after another fails not only in the United States, but globally. The Silicon Valley Bank in California collapsed last week, and after an FDIC takeover, First Citizens BancShares is presently examining a bid to acquire SVB.

Next came the failure of the New York Signature Bank. SB was recently acquired by Flagstar Bank, a subsidiary of New York Community Bank.

Last Thursday, First Republic Bank was “teetering on the brink” as a run on bank cash caused America’s largest bank’s CEO, Jamie Dimon, pause. CNN said that Dimon engaged with US Treasury Secretary Janet Yellon on a private sector rescue plan.

The outcome was an arrangement with a consortium of US lenders to infuse the First Republic with tens of billions of dollars in cash to prevent its collapse.

First Republic was saved by JPMorgan Chase, Bank of America, Citigroup, and eleven other lenders who provided a $30 billion financial infusion.

Credit Suisse, a venerable worldwide bank with a reputation for stability, collapsed in Europe last week and was acquired by UBS, which had been Credit Suisse’s competitor.

But, this may not be the end of the economic catastrophe. After the Silicon Valley Bank (SVB) and Signature Bank depositor rescues, Treasury Secretary Janet Yellen stated on Tuesday that authorities may guarantee all deposits at more banks.

According to Daily Caller, Yellen stated in prepared remarks to the American Bankers Association on Tuesday that the bailouts were necessary to protect the U.S. banking industry. She cited the activities of the Treasury Department and Federal Reserve in guaranteeing the deposits of SVB’s clients.

“Similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion,” she said. Earlier, Yellen had stated that comparable moves would only be taken for institutions whose failure posed a threat to the financial system, excluding smaller community banks.

Yellen stated, “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.”

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

More on this story via The Republic Brief:

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. CONTINUE READING…

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