President Joe Biden on Sunday took credit for creating a new lending mechanism to backstop banks after the banking meltdown over the weekend in which two banks collapsed due in part to increased interest rates meant to tamp down Biden’s soaring inflation.
The new facility, dubbed the “Bank Term Funding Program,” will provide liquidity “to help assure banks have the ability to meet the needs of all their depositors,” Treasury Secretary Janet Yellen, Federal Reserve Chair Jay Powell, and Federal Deposit Insurance Corp.’s Chair Martin Gruenberg announced Sunday.
The extraordinary measure quickly erected before markets opened Monday was praised by Biden, who also took credit for the financial invention.
“At my direction, @SecYellen and my National Economic Council Director worked with banking regulators to address problems at Silicon Valley Bank and Signature Bank,” Biden’s Twitter account posted. “I’m pleased they reached a solution that protects workers, small businesses, taxpayers, and our financial system.”
"Voting for TARP – bailing out banks … Talk about the most unpopular vote. The folks who quote caused the crisis, all of a sudden we're making sure that we bailed them out …But it was necessary. It was the right vote. And it helped save the economy."
– Joe Biden Dec. 5, 2016 pic.twitter.com/PWlX7C1YIv
— Howard Mortman (@HowardMortman) March 12, 2023
Biden’s decision to take credit for the new lending facility appears to contradict his prior position earlier in the day. According to Fox Business, Biden was opposed to extending deposit insurance to those who deposited more than $250,000 in banks, which the new invention now protects.
“Silicon Valley VCs/CEOs getting word from @WhiteHouse that @JoeBiden is against any bailout of SVB like extending deposit insurance well above $250k,” Fox Business’s Charles Gasparino scooped. “That could change if @federalreserve does believe there’s some systemic risk of bank runs, which there is evidence.”
According to Biden’s new mechanism, deposits beyond the $250,000 limit on FDIC insurance are available Monday, though the expense will allegedly not be transferred to taxpayers. The Treasury and FDIC’s announcement of the program wrote:
After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors. Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.
We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.
Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.
Finally, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors.
SCOOP: Silicon Valley VCs/CEOs getting word from @WhiteHouse that @JoeBiden is against any bailout of SVB like extending deposit insurance well above $250k. That could change if @federalreserve does believe there's some systemic risk of bank runs, which there is evidence.
— Charles Gasparino (@CGasparino) March 12, 2023
Follow Wendell Husebø on Twitter @WendellHusebø. He is the author of Politics of Slave Morality.
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