Dem Rep. Garamendi: We Do not Know How Huge SVB Depositor Backstopping Will Be and It Might Get Handed to Prospects

On Tuesday’s broadcast of the Fox Information Channel’s “Your World,” Rep. John Garamendi (D-CA) said that the backstopping of Silicon Valley Financial institution’s depositors may find yourself being handed on to the shoppers and we don’t understand how huge the backstopping goes to be.

Host Neil Cavuto requested, “I am wondering what you think happens with these higher costs that banks are going to have to absorb to pay for this added insurance to help the FDIC, because invariably, isn’t that going to be passed along to customers in one way, shape, or form?”

Garamendi responded, “Well, it could. But we still don’t know how much of that backstop is going to actually be used. It is there. And it could be used. A lot of it will depend upon the actual assets and liabilities of Silicon Bank and Signature. We don’t know that yet. That’s going to take time to work that out. But it may be that very little of that backstop money will actually be used, it could be the opposite. In any case, it is money that is put up by the entire American banking system. It’s not one bank. That cost is spread out among all of the banks, the big and the little and it is proportionate to the size and the operations of the bank. So, perhaps on the margin, but I suspect there will be something far more important that will determine the cost to the customers, and that happens to be how much profit the bank wants to make, how much competition any bank happens to have that could or could not raise their prices because of the competition. Those will be far more notable than the issue of this particular backstop.”

Observe Ian Hanchett on Twitter @IanHanchett

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