Mazzei Minute: 03.24.23
Poorly run banks that took on too much risk are in trouble. It is NOT the job of the other well-run banks to bail out the bad banks. However, that seems to be exactly what U.S. Treasury Secretary Janet Yellen and FDIC regulators want.
The FDIC collects reasonable premiums from all member banks to maintain healthy reserves to protect bank depositors up to $250,000. But Yellen and the FDIC socialist overlords announced, without congressional approval, that the U.S. Treasury and FDIC would cover even uninsured deposits over $250,000.
They apparently want to take care of their high-dollar Silicon Valley buddies, and even Chinese Communist Party customers, but the fund balance of $170 billion isn’t a fraction of what is needed to protect all uninsured deposits in the banking sector.
The word on Wall Street is that a big bank or two was ready to step in and absorb Silicon Valley Bank, but the FDIC Biden-appointed regulators shut it down because they didn’t want a big bank getting any bigger. That’s how the private sector cleans bad banks – buy them on the cheap just like a wise investor buys when prices are low.
But the anti-capitalists at the FDIC think it’s better to guarantee uninsured deposits – something we certainly can’t afford. It’s clear we need an entire regime change of all the financial leadership in the Biden Administration. They keep making one big mistake after another.