Daily Caller News Foundation
Treasury Secretary Janet Yellen’s plan to only safeguard all uninsured deposits at two failing banks deemed to be a “systemic risk” to the U.S. economy would destroy smaller financial institutions while simultaneously bailing out Chinese depositors, experts told the Daily Caller News Foundation.
During testimony at a Senate Finance Committee hearing Thursday, Yellen told Sen. James Lankford that all deposits at the now-defunct Silicon Valley Bank (SVB) and Signature Bank would be fully insured by the federal government, but smaller community banks would not receive the same insurance. Further, the bailout of depositors at the two collapsed banks would be paid for by a small tax levied against all financial institutions, regardless of size.
SVB’s stock collapsed last week amid numerous customer bank runs following the institution’s disclosure of a $1.8 billion net loss on asset sales on the back of high interest rates, forcing regulators to shut down the bank. Just two days later, Signature Bank, a premier lender in the crypto space, was closed by regulators due to “systemic risks,” CNBC reported.