US Govt Bails out SVB with Whose Money?

A detailed plan of how the government plans to rescue Silicon Valley Bank

Do we consider this a government bailout? One treasury official emphasized that this process would not bring these banks back to life. The executives would not retain their jobs. These new processes would only be there to benefit the people who trusted the bank to store their money and not to help people who were over leveraged in risky investments.

The Treasury is placing large emphasis on how the money would be paid to the bailout. Instead of taking it from taxpayers, they will be taking it from a fund that is privately paid into by the banks. Biden and Janet Yellen, Treasury secretary, stated that it would come from the bank fund and not the taxpayers. Yellen’s statement below.

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“We are trying to help depositors of institutions. The banks, equity and bondholders are being wiped out,” the Treasury official said. “The firms are not being bailed out. The depositors are being protected.”

You can see the inconsistency in the way the narrative is being told. Even Biden supporters have begun to think this is shaping up exactly like 2008 and the taxpayers will be on the hook. Even though the fund is paid into by U.S. banks, it is ultimately backstopped by the Treasury Department, potentially putting taxpayers on the hook if it runs out.

The fund believes it will be safe as it has $100 Billion ready to back the banks. The fund then plans to recoup this money by charging more fees to the banks, the Fed, Treasury and FDIC. It could work out long term, but this is a big risk for our governments funds.

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