President Joe Biden reassure Americans that there is no need for panic after two big banks failed over the weekend of March. The federal government announced that all depositors at Silicon Valley Bank and Signature Bank will be protected, with the funds coming from a special fund set up by the nation’s banks and from the sale of the banks’ assets, not from taxpayers.
“Americans can rest assured that our banking system is safe. Your deposits are safe. Let me also assure you, we will not stop at this. We’ll do whatever is needed,” Biden said from the White House.
Biden repeated in his remarks that “no losses will be borne by the taxpayers.”
Biden pledged to take action to “reduce the risks of this happening again,” pointing the finger at the Trump administration for rolling back some of the requirements the Obama administration put in place during their administration. Biden promised to ask Congress and the banking regulators to strengthen the rules for banks and to protect American jobs and small businesses.
The president also noted that investors in the banks will not be protected. They knowingly took a risk, and when the risk didn’t pay off, investors lose their money. Biden said that the management of these banks will be fired.
If the bank is taken over by FDIC, the people running the bank should not work there anymore. He also called for an investigation into how the banks got into this circumstance in the first place and for those responsible to be held accountable.
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Avoidable failures?
Senator Elizabeth Warren, D-Mass., argued that the bank failures were “entirely avoidable” had Congress not passed a law in 2018 to ease regulations in the Dodd-Frank Act made after the 2008 financial crisis. She called on Congress to repeal the 2018 bank deregulation bill.
Senator Bernie Sanders, I-Vt., shared her sentiment and also pinned blame on former President Donald Trump for signing the “absurd” deregulation bill.
Despite the Biden administration maintaining that the federal government will not be bailing out Silicon Valley Bank investors, nor will taxpayers, some Republicans have already labeled the administration’s response as the “Biden Bailout.”
Republican presidential candidate Nikki Haley said that Biden “is pretending this isn’t a bailout” and that taxpayers will be responsible, despite Biden’s assurances.
David McIntosh, president of the conservative, anti-tax group Club for Growth, pushed back on new regulations floated by Biden and said, “The Biden bank bailout is a result of Biden’s failed economic policies.”
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