Biden Says Silicon Valley Bank Managers Should Be FIRED Over Collapse, Defends His Response
President Joe Biden said Monday that the US banking system is “safe” and assured taxpayers that they will not foot the bill for the shocking collapse of Silicon Valley Bank.
Biden tried to project calm amid fears of a financial collapse and bank run after stocks plunged 74 percent in premarket trading amid the second-biggest bank collapse in US history.
He defended his administration’s response in his sub-four-minute remarks, said Silicon Valley Bank executives should be fired and pointed a finger at Donald Trump for rolling back regulations.
Biden’s comments delivered before a trip to California on Monday morning were aimed at reassuring the nation after the collapse of two banks in a matter of days and minutes before US markets opened at 9:30 a.m.
He said that while depositors will be protected, investors will not, stating: “This is how capitalism works.”
Bank shares plunged as much as 71 percent before the market Monday morning despite Biden’s efforts to calm investors and a plan to ensure all depositors could access their funds.
The dollar fell on Monday on expectations that the Federal Reserve will be less aggressive in raising interest rates after authorities stepped in to limit the fallout from the SVB collapse.
The Republicans’ priority is that American taxpayers do not have to help dig these banks out of their own graves, something the Biden administration has insisted will not happen.
President Biden tried to help avert a banking crisis with comments Monday morning.
“Taxpayers will not bear losses,” Biden said Monday morning.
‘Instead, the money will come from fees that banks pay to the deposit insurance fund. Because of the actions our regulators have already taken, all Americans should feel confident that their deposits will be there if and when they need them.’
He also said: ‘The management of these banks will be fired. If the FDIC takes over the bank, the people who run it should no longer work there.’
“Investors in the banks will not be protected,” added the president. “They knowingly took a risk and when the risk wasn’t worth it, investors lost their money. This is how capitalism works.’
SVB’s rapid plunge on Friday is the second-biggest banking collapse in history and has fueled fears of contagion in the banking sector amid the Federal Reserve’s strongest rate-hike cycle since the early 1980s. .
First Republic Bank shares fell as low as $47.25 on Monday amid frenzied fears of a bank rout when Wall Street opens trading for the first time since SVB and Signature Bank of New York closed.
“The bottom line is this: Americans can rest assured that our banking system is safe,” the president said in his less than four-minute remarks.
Treasury Department Secretary Janet Yellen said Sunday that the federal government would not bail out banks as it did institutions during the Great Recession of 2008.
Republicans want to make sure taxpayers don’t pay a dime and it has sparked debate about the role of government in helping the financial sector.
“I hope the president calms the waters,” Texas Sen. John Cornyn said Monday morning on Fox News. “There was no reason for people to panic.”
“The federal deposit will protect people who deposit $250,000 or less,” added the Republican legislator. ‘It is my understanding that this bank was making long-term investments and was not prepared for the increase in interest rates caused by the increase in the discount rate by the Federal Reserve. But hopefully there will be a smooth transition to protect all depositors without taxpayers being in a position to foot the bill.’
Biden’s comments were intended to bolster confidence in the banking sector after the White House made assurances over the weekend that it would make SVB and Signature Bank clients “of integrity” and that “the taxpayer will bear no loss.”
But investors smell blood in the water, with multiple US banks suffering in early trading. PacWest Bancorp shares fell 41 percent; Western Alliance Bancorp shares fell 33 percent; and Bank of America shares fell 4 percent.
Regulators came up with a plan on Sunday to support depositors holding money at SVB to help curb fears of a systemic run that could spark a run on other banks this week.
Depositors at SVB and Signature Bank in New York, which closed on Sunday, will have full access to their money starting Monday.
A run on Silicon Valley Bank last week following a massive drop in shares led to the bank’s doors being closed on Friday. Signature Bank of New York was also closed on Sunday as financial experts warned of a domino effect.
SVB is a technology-focused institution where many startups have kept their funds, while Signature is a popular funding source for cryptocurrency companies.
After a 60 percent plunge in shares of the country’s 16th-largest bank last week, there was a run on SVB that saw $42 billion in withdrawals in a single day on Thursday and a complete collapse of the institution on Friday. .
Lawmakers and financial experts said over the weekend that the only hope for SVB was that a last-minute buyer came in on Sunday and saved SVB before markets opened on Monday.
The Treasury Department designated SVB and Signature as systematic risks; this allowed the Department the authority to dismantle the institutions to ‘fully protect all depositors’.
The Federal Deposit Insurance Corporation (FDIC) deposit insurance fund will be used to help cover the availability of funds to depositors. Many were uninsured because there was a $250,000 cap on guaranteed deposits.
The Federal Reserve is also creating a new Bank Term Financing Program aimed at safeguarding institutions affected by market instability and waves caused by the SVB failure.
Republicans are against a bailout because they don’t want the burden to fall on American taxpayers, although the administration doesn’t appear to be considering such a move.
“We’re not going to do that again,” Yellen said on CBS News on Sunday regarding the potential for a 2008-era bailout. “But we’re concerned about depositors and we’re focused on trying to meet their needs.”
Florida Gov. Ron DeSantis, who is expected to run for the 2024 Republican nomination, suggested the collapse was due to increased distraction from institutions by diversity, equity and inclusion goals.
He often argues that so-called ESG (environmental, social and governance) efforts go too far.
“This bank, they’re so worried about DEI and politics and all sorts of things, I think that really distracted them from focusing on their core mission,” he said in an interview with Fox News’ Sunday Morning Futures.
“We have such a tangle of federal regulations,” he added, describing the collapse as a failure of federal regulators. “We have a massive federal bureaucracy, and yet they never seem to be there when we need them to prevent something like this.”
Former South Carolina governor and United Nations ambassador Nikki Haley, who is running for the Republican Party’s presidential nomination, was one of the first in the still-emerging Republican camp to call for taxpayers not to be exposed to the failure of BLS.
“Taxpayers should absolutely not bail out Silicon Valley Bank,” he said in a statement. Private investors can buy the bank and its assets. It is not the responsibility of the American taxpayer to intervene. The era of big government and corporate bailouts must end.”
Republican 2024 presidential candidate Vivek Ramaswamy, a billionaire founder and investor in a biotech company, also opposed a bailout.
“Silicon Valley Bank made some exceptionally bad management decisions,” he said in an interview with CNN on Sunday. “I don’t think we should be rewarding that kind of bad behavior, that kind of mismanagement.”
Republican Rep. Nancy Mace said on CNN on Sunday that she would not support a bailout: “We can’t keep bailing out private companies, because there are no consequences for their actions. When people make mistakes or break the law, they must be held accountable in this country.’