Posted on 03/30/2023 4:55:50 AM PDT by EBH
The collapse of Silicon Valley Bank is expected to cost the Federal Deposit Insurance Corp.’s deposit insurance fund roughly $20 billion, the agency estimates, while Signature Bank failure will cost about $2.5 billion. The bulk of those costs relate to covering deposits at the two banks that exceeded the standard federal deposit-insurance limit of $250,000, FDIC chair Martin Gruenberg said in Congressional testimony this week.
The FDIC in May will propose a special assessment on banks to repay the insurance fund’s losses stemming from the uninsured deposit coverage, Gruenberg said in his testimony.
The proposal comes amid a longer-term debate–predating this year’s bank failures–about how to shore up the fund, which fell below its legally mandated funding level in recent years. The deposit-insurance fund, which held just over $128 billion at the end of 2022, is funded mainly through quarterly fees paid by insured banks, and any changes in those fees can stir controversy. Banking industry groups last year opposed the FDIC board’s vote to raise deposit insurance assessment rates by 0.02 percentage point–a move that was needed, the FDIC said, to help the insurance fund reach its required minimum funding level.
Lawmakers have raised similar concerns as Congress held hearings on the bank failures this week. “Can you tell me how it’s possible, when this special assessment fee process is completed, that my community bankers aren’t going to wind up disproportionately paying for the mistakes and the folderol of the biggest institutions in the country?” Rep. Frank Lucas, an Oklahoma Republican, asked Gruenberg during a House Financial Services Committee hearing Wednesday.
...A surge of insured deposits around the start of the pandemic pushed the fund below that level. The FDIC also has a longer-term goal of boosting the reserve ratio to 2% to help the fund withstand financial crises.
(Excerpt) Read more at msn.com ...
Rhetorical question.
I thought the SVB reimbursements woukd be funded when the assets were dissolved. Also, 22 billion is chump change.
A Joe Biden give-away of our tax money to democrat friends and supporters who would have lost millions upon millions if the government had not agreed to a full bailout.
But instead of adhering to the law and the FDIC insurance limit of $250K per account Biden agreed to a full bailout so leftist Dot.Com friends of the democrats would get full restitution.
What the heck - it’s only tax money from truck drivers, waitresses, etc. - no one that matters to the democrats anyway.
taxing the safe banks to bail out the unsafe banks = the socialization of risk in banking
sounds like another bailout for the country club one-world crony capitalists at taxpayer expense. Our “betters” can’t make it on their own. they need taxpayers to fund their lavish lifestyles.
You can't even execute a real estate transaction for the median U.S. home price without exceeding the FDIC cap by $150,000+ in at least three different bank accounts.
You have just correctly defined the purpose of insurance. The misapplied word tax must be replaced by premiums.
Future premiums paid by FDIC insured banks over the fund reserve cover the loss
We are s-o-o-o dumb...
Imagine if your public utility only accepted payment in cash or in the form of checks drawn on the utility company’s own bank.
It should be the shareholders of the bank and no executives should get out of jail until all debts are paid.
biden will just issue fiat dollars and the depositors will think they have their money, until their deflated buying power becomes painfully obvious.
I forget to transfer money to cover a utility bill to my checking account, $35 fine.
Massive liberal bank loses a couple billion and fails, “Here’s a few billion to make it all better.”
You could describe almost anything as socialism with this logic.
breathing = socialism
not breathing = socialism
Here’s is a meaningful differentiation: a private property-based, free-market economy exists when privacy and private property exist, and where decision makers at least mostly bear the costs and benefits of their decisions.
So, if I have a beach house and don’t insure it, I save on insurance and bear the risk of flood.
If I have a beach house and insure it, and if the insurance company is a Best A+ insurance company, I pay for insurance and can reasonably expect to have my loss covered in the event of flood.
In Germany, you generally need 20 percent downpayments, and cannot get cash-back refinancing. Homeowners tend to come into ownership free and clear of mortgage. Germany doesn’t socialize mortgage finance. Of the countries affected by the Financial Crisis of 2008, Germany was less affected and fast to recover.
Usually, Germany doesn’t guarantee deposits in excess of something like one month’s earnings of an ordinary worker. If you have more deposits than that, you are expected to protect yourself.
Even back in the days when we were highly-ranked on the index of economic freedom, we (the U.S.) had a relatively-socialized financial sector. Now that we are merely above average on the index of economic freedom, the socialization of financial risk is just one of a number of problems.
I agree.
But the right way to address the issue is to change the limit through whatever the legit process may be and apply the rule fairly and equally to all.
It stinks of cronieism when the president unilaterally decides to ignore the applicable rules and laws and exceed the guidelines when he feels like it.
We are supposed to be a nation of laws but that is no longer how the federal government operates.
they ignore laws and do what they want.
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