by Jason Cohen
The Federal Deposit Insurance Corporation (FDIC) announced a proposal on Thursday to charge new fees to replenish funds spent bailing out Silicon Valley Bank (SVB) and Signature Bank depositors in March that will cost Americans, according to experts who spoke to the Daily Caller News Foundation.
Under the proposal announced at the FDIC Board of Directors Meeting, the regulator would charge special assessment fees to an estimated 113 banks, mostly those with over $50 billion in assets and none under $5 billion in assets. The banks will pass the costs on to their customers, according to economists who spoke to the DCNF.
“The FDIC’s new rule implementing this ‘special assessment’ is, in a word, ridiculous,” E.J. Antoni, research fellow for Regional Economics at the Heritage Foundation’s Center for Data Analysis, told the DCNF. “The FDIC bailed out bad actors and will now ask responsible fiduciaries to bear the cost. Since those costs are passed on to customers, that means you and I are footing the bill.”
The Deposit Insurance Fund (DIF), which the FDIC implements to safeguard bank depositors, was depleted by an estimated $18.5 billion, according to a statement by FDIC Associate Director Michael Spencer at the meeting. The FDIC estimated that it spent about $15.8 billion on covering uninsured deposits because of worries that the banks’ collapses posed systemic risks to the financial sector.
“No losses will be — and I want — this is an important point — no losses will be borne by the taxpayers,” Biden pledged. “Let me repeat that: No losses will be borne by the taxpayers. Instead, the money will come from the fees that banks pay into the Deposit Insurance Fund.”
Spencer said FDIC staff estimates that banks with over $50 billion in assets would cover over 95% of the fees and that none under $5 billion in assets would be impacted.
“No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer,” the Treasury, Federal Reserve and FDIC wrote in a joint statement. “We are also announcing a similar systemic risk exception for Signature Bank … 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.”
The special assessment fees charged to lenders will not recover any of the estimated loss of $13 billion related to the collapse of First Republic Bank in May.
“This is a bailout of Silicon Valley billionaires that is going to be paid by mom-and-pop depositors,” Dr. Thomas Hogan, senior economic research faculty and former chief economist for the senate’s committee on banking housing and urban affairs, previously told the DCNF.
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Jason Cohen is a reporter at Daily Caller News Foundation.
Photo “Federal Deposit Insurance Corporation Building” by Tony Webster. CC BY 2.0.
SHOCKER. They want to pass on the banks’ incompetence and negligence to the customers who are completely innocent in the banks’ failures. If the banks are held accountable, not the customers, the banks won’t care when it happens again.