YELLEN FIRE IN A CROWDED THEATER: Janet Yellen says only big banks of choice will be bailed out, not regional banks

03/20/2023 / By Belle Carter

Treasury Secretary Janet Yellen admitted before the Senate Finance Committee on March 16 that only larger banks will be bailed out by the Biden administration, leaving small regional banks to fend for themselves,

During the hearing, Sen. James Lankford (R-OK) grilled her as to which banks would be bailed out. He specifically asked if banks in the Sooner State will receive the same treatment Silicon Valley Bank (SVB) or Signature Bank just got. The Oklahoma senator also asked Yellen if deposits in community banks, regardless of size, are fully insured.

“A bank only gets that treatment if a majority of the [Federal Deposit Insurance Corporation] FDIC board, a supermajority of the Fed board, and I – in consultation with the president – determine that the failure to protect uninsured depositors would create systemic risk and significant economic and financial consequences,” Yellen replied.

Lankford pointed out that under the treasury secretary’s plan, Americans to withdraw money from smaller banks and transfer it to the chosen banks the government has deemed worthwhile to protect.

“We have seen the mergers of banks over the past decade. I’m concerned you’re about to accelerate that by encouraging anyone who has a large deposit in a community bank to say, ‘We’re not going to make you whole, but if you go to one of our preferred banks, we will make you whole at that point.'”

Yellen insisted they are not encouraging moves to larger banks, but they felt that there was a serious risk of contagion that could trigger runs on many banks.

In spite of the sentiments aired by the senator, she still assured the public not to worry. “Our judgment is that the banking system overall is safe and sound. Depositors should have confidence in the system,” she stated.

Small banks forced to fund SVB bailout

Lankford further complained that the government’s actions to help the California bank appear to be a bailout funded by a fee on other financial institutions.

“Banks in Oklahoma in rural towns are about to pay a special fee to be able to bail out millionaires in San Francisco. Now, what Oklahoma banks and bankers had to do with that bank failure in San Francisco, I have no idea,” he said. (Related: Small and regional banks are being left to fend for themselves while big banks like Silicon Valley Bank are being bailed out.)

Elsewhere during the hearing, the secretary also clarified that regulators’ decision to backstop all deposits at the two lenders – SVB and Signature Bank – that failed over the past weeks was an exception to the norm.

“Authorities invoked the systemic risk exception to backstop all funds, including those that exceeded the Federal Deposit Insurance Corp.’s standard $250,000 limit, at SVB and Signature Bank when they took over and shut down both lenders within days of each other,” she said.

Meanwhile, Sen. Elizabeth Warren (D-MA) said the demise of SVB was a “direct result” of policymakers’ decisions beginning with the 2018 rollbacks of the Dodd-Frank Act. The changes, implemented under former President Donald Trump, lifted the asset threshold for banks required to undergo stress tests to expose a bank’s vulnerability in times of economic turmoil.

The Massachusetts senator and erstwhile Democratic presidential nominee remarked what while she had a lot of questions for banking regulators, Congress “handed … the flamethrower” to Federal Reserve Chairman Jerome Powell that he later “aimed at the banking rules.”

Learn more about the collapsing U.S. economy at EconomicRiot.news.

Watch trading expert Gregory Mannarino talk about Treasury Secretary Janet Yellen’s admission that only certain banks chosen by Washington will be bailed out.

This video is from What is happening channel on Brighteon.com.