Wall Street -- not taxpayers -- will pay for the SVB and Signature deposit relief plans

[RandySF]

WASHINGTON — Plans announced Sunday to fully reimburse deposits made in the collapsed Silicon Valley Bank and the shuttered Signature Bank will rely on Wall Street and large financial institutions — not taxpayers — to foot the bill, Treasury officials said.

“For the banks that were put into receivership, the FDIC will use funds from the Deposit Insurance Fund to ensure that all of its depositors are made whole,” said a senior Treasury Department official, who spoke to reporters Sunday about the plan on the condition of anonymity.

“The Deposit Insurance Fund is bearing the risk,” the official emphasized. “This is not funds from the taxpayer.”

The Deposit Insurance Fund is part of the FDIC and funded by quarterly fees assessed on FDIC-insured financial institutions, as well as interest on funds invested in government bonds.

The DIF currently has over $100 billion in it, a sum the Treasury official said was “more than fully sufficient” to cover SVB and Signature depositors.

The Biden administration is deeply aware of the public anger sparked by taxpayer-funded bailouts of major Wall Street banks during the 2008 financial crisis, and using the DIF to shore up depositors is seen as a way to avoid repeating the same process.

To that end, federal officials strongly pushed back on the idea that the plans for SVB and Signature constituted a “bailout.”

“The banks’ equity and bond holders are being wiped out,” said the official at Treasury. “They took a risk as owners of the securities, they will take the losses.”





https://www.cnbc.com/2023/03/13/wall-street-not-taxpayers-will-pay-for-the-svb-and-signature-deposit-relief-plans-.html

[peppertree]

1. If Repugs take all three branches of govt in '24, the FDIC is toast

They'll use Farce News and their other media mouthpieces to slam it as a "New Deal relic" and a "moral hazard" - and then proceed to relieve the banksters of the "burden" of maintaining it.

After that? God help us all.

[roamer65]

2. Who holds the bonds?

Im sure other banks are bond holders.

The Federal Reserve is giving member banks special loaning privilege in the interim.

That means there is exposure in the banking system.

It’s creating money to insure solvency.

[RandySF]

3. Are you looking for a reason to screw depositors?

SVB will exist no more.

[roamer65]

8. Do you think we should insure Roku's $487M?

The FDIC limit is $250k.

[RandySF]

10. The banks paid the fees to cover it.

[roamer65]

12. I have a problem with bending the rules for multimillions depositors.

There is a $250k limit to ensure the deposit insurance fund can support other failures as well.

I smell another TARP coming.

[kelly1mm]

19. Up to the 250K limit. Roku had 400M+ with SVB. Should they be made whole? Are

we not just better off saying FDIC insurance is unlimited from here on out?

[RandySF]

21. Roku employs 3,000 people.

[Deuxcents]

4. Does this trickle down to those w/ IRA's or those still contributing to 401's?

[RandySF]

5. Can you elaborate?

[Deuxcents]

6. It's said that Wall Street will pay, not the taxpayers

But taxpayers n working people are contributing to their retirement funds n retirees are taking distributions. How will this trickle down or will it?

[roamer65]

9. Very possible.

Depends on if your funds hold SVB bonds or stocks.

[RandySF]

11. Which are not insured.

[gratuitous]

7. The Deposit Insurance Fund if bearing the risk, not taxpayers, huh?

How is the DIF funded? Oh, through quarterly fees assessed on FDIC-insured financial institutions and interest on funds invested in government bonds. Sounds so benign. Do these quarterly fees and government bond investments come out of the bank executive or from somewhere else? Like, could these financial institutions be paying higher interest rates to depositors if they didn't have to be forced to backstop the bad actors in their industry?

[roamer65]

13. The government bonds held by DIF will have to be monetized.

Aka quantitative easing…via money creation.

Also probably another TARP program like 2008 and 2009.

[doc03]

14. The money is coming from the DIF. It came from the

customers of banks all over the country not just SVB my bank and your bank. Fees from our 401ks, IRAs, our savings accounts.
Don't give me this bs about we aren't bailing them out again. Maybe it has to be done because once again they are too big to fail, just don't bullshit us again.

[RandySF]

15. SVB and Signature are being liquidated and auctioned off.

[roamer65]

17. I smell another TARP coming.

Fucking Trump deregulated the banks and now another fucking Trump/Powell mess to clean up.



God, I wish we would have had Hillary as president. Hillary would not have weakened Dodd-Frank.

FDIC and the Federal Reserve are now talking a special fund to clean up other banks that fail.

[walkingman]

16. They need to claw-back the bonuses - no one needs to be rewarded for failed performance.

[yaesu]

18. Wall street may pay another way in the form of a black Monday

If they overreact tomorrow. I'm not an investor and have no fucks to give if they do but will be interviewing to see how the casino acts.

[multigraincracker]

20. The pre-market for the DOW is up

almost 400 points right now. Doesn’t look like a black Monday is going to happen.
The money is still there but it is invested in low interest long term investments. Big investors want to pull it out to get higher returns. It seems more and more like it’s not the end of the world.

[betsuni]

22. Thank you.

[LetMyPeopleVote]

23. Here is President Biden's statement

Link to tweet