The ripple effect from Friday’s Silicon Valley Bank’s collapse continues to send shockwaves across the global financial community. After Sunday’s closure of New York’s Signature Bank, some fear other financial institutions will follow suit.
Steve Moore, a former Trump White House adviser and current chief economist at FreedomWorks said SVB’s closure might be the “tip of the iceberg.”
On Monday, Moore told Fox News’ Harris Faulkner that the Biden administration’s fiscal policies and the Federal Reserve’s interest rate increases precipitated SVB’s collapse. Moore also warned that the Biden administration’s financial policies have made other financial institutions vulnerable.
In a Monday morning briefing, President Biden said: “Thanks to the quick action of my administration over the last few days, Americans can have confidence that the banking system is safe.”
Supporting the president, the U.S. Treasury Department, the Federal Reserve, and the Federal Deposit Insurance Corporation (FDIC) announced over the weekend, RTM previously reported, an emergency measure was now in place to protect depositors.
“Today, we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system,” the joint announcement read.
Treasury Secretary Janet Yellen affirmed she had spoken with President Biden and bank regulators and supported a plan that “fully protects all depositors.”
Among other protections, the emergency plan increases FDIC’s coverage — a single depositor currently enjoys coverage for $250,000. The new plan protects all deposits — insured and uninsured.
Moore was not as optimistic about the economic outlook. He explained:
“I agree with the president that we don’t have an overall banking crisis. The system is sound, but I do think you have a lot of major banks that are in some trouble. And SVB, the Silicon Valley Bank, may just be the tip of the iceberg here.
And I think it’s important for people to understand how this potential banking crisis happened. It’s not because there aren’t enough bank regulators, as Biden is trying to say.
It’s because of the massive inflation and the trillions and trillions of dollars of borrowing that the federal government has done that has put our financial system in great jeopardy and great peril.
You can’t just keep doing this month after month, year after year, borrowing trillions and trillions of dollars. And so what happened, because of the Biden spending and debt policies, is that not only did inflation go up, but interest rates have gone up.
Harris, as you know, the Fed has had to raise interest rates eight or nine times, and they’re talking about more interest rate increases to come. And that’s caused a lot of financial problems for these big banks is the interest rates go up.
President Biden tried to allay fears saying, “The taxpayers will bear no losses. Instead, the money will come from the fees that banks pay into the deposit insurance fund. Because of the actions that our regulators have already taken, every American should feel confident that their deposits will be there if and when they need them.”
On Sunday, the Fed announced it would provide additional funding to ensure that banks can meet depositor needs. The Fed’s statement assured: “The Federal Reserve is prepared to address any liquidity pressures that may arise.”
The Central Bank also moved to allay fears by establishing a new Bank Term Funding Program (BTFP). The goal is to guarantee deposits at failed institutions.
The Central Bank announced the Treasury Department will “make available up to $25 billion from the Exchange Stabilization Fund as a backstop for the BTFP.”
Scroll down to leave a comment and share your thoughts.
