Yellen says only banks that pose a systematic risk threat would get that treatment
Per C-SPAN
When discussing the Fed's decisions regarding Silicon Valley Bank, Senator James Lankford asked treasury Secretary Janet Yellen critical questions regarding whether other community banks would get the same treatment. The Senator mentioned SVB and Signature bank, as both were assisted by the Feds.
Sen. Lankford's question was whether other community banks in Oklahoma would get the same treatment as SVB or Signature Bank and be fully insured regardless of their size, and to this, Yellen replied.
Yellen specified that the banks must be within the following to get the same treatment of being fully insured by the government.
If...
- FDIC board,
- Fed board,
- and Yellen, in consultation with the President
... determine that being unable to protect "uninsured depositors would cause systemic risk and significant economic and financial consequences."
When asked what their plan was to prevent large depositors to move their money from community banks to larger banks, Yellen said that that situation was not what they were encouraging. Sen. Lankford pressed on Yellen, saying that what was happening was that they only promised preferred banks and not community banks to make them whole.
Yellen said that the reason why this was happening was due to "bank failures." Sen. Lankford pressed that the reason was that they were only fully insuring big banks and not community banks.
Amid the collapse of Silicon Valley Bank, the Bank of America has reportedly received over $15 billion in new deposits. Other major banks like JPMorgan, Citigroup, and Wells Fargo reportedly received billions in new deposits.
Jerome Powell reportedly blocked efforts to include phrases that mentioned "regulatory failures" in a joint statement with the Feds, Treasury Department, and the Federal Deposit Insurance Corporation, saying he wanted to focus on "actions being taken to shore up the financial system."
See flow at unusualwhales.com/flow.
Other News:
- Bank of America benefited from Silicon Valley Bank's collapse as it received over $15 billion in new deposits
- Jerome Powell, the chair of the Federal Reserve, blocked phrases regarding regulatory failure by the Federal Reserve in the Silicon Valley Bank collapse
Resources: