“The bottom line is this: Americans can rest assured that our banking system is safe. Your deposits are safe. Let me also assure you, we will not stop at this. We’ll do whatever is needed,” Biden said in a speech.
Those remarks came after Biden greenlit a plan to protect all deposits at California’s Silicon Valley Bank (SBV) and New York’s Signature Bank, which were hit by bank runs amid fears of insolvency.
Biden insisted that the money won’t come from taxpayers, but from fees that banks pay into a Federal Deposit Insurance Corp. (FDIC) fund. He added that a 2018 bill to deregulate banks paved the way for SVB’s collapse, a message echoed by progressives.
“These recent bank failures are the direct result of leaders in Washington weakening the financial rules,” Sen. Elizabeth Warren (D-Mass.), a leading opponent of the 2018 bill that made it so that SVB wasn’t subject to stress testing and capital requirements, wrote in an opinion piece Monday.
Republican lawmakers signaled Monday they will blame Biden for the banks’ collapse and criticize his decision to subsidize depositors.
“The FDIC will bail out Silicon Valley billionaires, forcing community bankers in Kansas to pay for the abysmal failures of a woke California bank. What kind of precedent is that? Why do we even have a limit on FDIC insurance if we simply ignore it when times get tough?” Sen. Roger Marshall (R-Kan.) tweeted.
Wall Street, meanwhile, is concerned about the threat of a broader crisis. More than a dozen regional banks saw their stock price plummet on Monday as investors feared that their depositors would move their money to larger institutions.
