A high Home Republican referred to as for the federal authorities to quickly insure all financial institution deposits in any respect banks across the nation.
Congressman Blaine Luetkemeyer (R-MO) mentioned Tuesday that the federal government ought to again up all deposits in banks in the interim with the intention to shore up confidence within the monetary system and keep away from financial institution runs. His feedback come amidst controversy over the federal government’s determination to totally insure the deposits of Silicon Valley Financial institution after it collapsed final week.
“If you don’t do this, there’s going to be a run on your smaller banks,” Luetkemeyer advised POLITICO. “Everyone’s going to take their money out and run to the JPMorgan’s and these too-big-to-fail banks, and they’re going to get bigger and everybody else is going to get smaller and weaker, and it’s going really be bad for our system.”
Luetkemeyer, a former banker and a member of the Home Monetary Companies Committee, is one of some Home Republicans taking the Biden administration’s line on insuring deposits at SVB. Different Republicans in Congress, together with Reps. Matt Gaetz (R-FL) and Lance Gooden (R-TX), and Senators Josh Hawley (R-MO), J.D. Vance (R-OH), Tom Cotton (R-AR), and Roger Marshall (R-KS), amongst others, have blasted the Biden administration’s coverage, calling it a bailout for big banks.
Luetkemeyer appeared to disagree. “The thought process here is that this is a contagion that could be spread across the entire banking system if it’s not contained and if people don’t stop and be calm about their assessment of the situation,” he mentioned. “This is a Chicken Little situation. You know, the sky is falling. Everybody runs around like that, the whole thing’s going to implode.”
“So what you could do right now is that very same thing and say, hey, look, for another 12 months here or six months, we’re going to guarantee you every single deposit in this country and every bank until we get this interest rate situation resolved and these banks get back on solid footing,” he mentioned. He famous that after the monetary disaster in 2008, a brief coverage was established by the FDIC that elevated deposit insurance coverage above the $250,000 restrict.
The Republican later backed down considerably, saying in a press release that the coverage ought to solely final between 30 to 60 days.
The FDIC introduced Monday that it will insure all depositors at Silicon Valley Financial institution after it collapsed late final week. “Depositors will have full access to their money beginning this morning, when Silicon Valley Bridge Bank, N.A., the bridge bank, opens and resumes normal banking hours and activities, including online banking,” the FDIC mentioned in a press release. “Depositors and borrowers will automatically become customers of Silicon Valley Bridge Bank, N.A. and will have customer service and access to their funds by ATM, debit cards, and writing checks in the same manner as before. Silicon Valley Bank’s official checks will continue to clear. Loan customers should continue making loan payments as usual.”
“The transfer of all the deposits was completed under the systemic risk exception approved [Sunday],” the FDIC added. “All depositors of the institution will be made whole. No losses associated with the resolution of Silicon Valley Bank will be borne by taxpayers. Shareholders and certain unsecured debt holders will not be protected. Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.”
Learn the complete article here