Treasure Secretary Janet Yellen suggested to the U.S. Senate on Thursday that the government is essentially picking winners and losers when it selects certain banks to fund while allowing others to perish.
Breitbart News senior writer John Nolte aptly pointed out that it often seems the losers end up being more minor community banks.
Sen. James Lankford (R-OK) questioned Yellen on what the federal procedure would be should a small Oklahoma bank fail.
“Will the deposits in every community bank in Oklahoma, regardless of their size, be fully insured now?” Lanford asked. “Are they fully covered, every bank, every community bank in Oklahoma, regardless of the size of the deposit? Will they get the same treatment that SVBP [Silicon Valley Bank] just got or Signature Bank just got?”
Yellen more or less replied that one will only receive a bailout if herself and other powerful figures determine them worthy of such a privilege.
“A bank only gets that treatment if a majority of the FDIC board, a supermajority of the Fed board, and I, in consultation with the president, determine that the failure to protect uninsured depositors, would create systemic risk and significant economic and financial consequences.”
Must watch. Yellen has no idea how to answer the question and admit they’re arbitrarily making it up as they go. Senator Lankford stays pointed and calls it as it is. Truly terrifying.
— Autism Capital 🧩 (@AutismCapital) March 17, 2023
“So what is your plan to keep large depositors from moving their funds out of community banks into the big banks?” Lankford posed to the treasury secretary. “We have seen the mergers of banks over the past decade, and I’m concerned you’re about to accelerate that by encouraging anyone who has a large deposit in a community bank to say, ‘We’re not gonna make you whole, but if you go to one of our preferred banks, we will make you whole at that point.’”
Yellen replied, “Uhm… look, I mean, that’s certainly not something that we’re encouraging.”
Lanford then declared, “That is happening right now!”
Yellen replied that it is occurring due to concerns by depositors about previous bank failures and if other banks could also be shut down.
The Senator shot back, “No, it’s happening because you’re fully insured no matter what the amount is if you’re in a big bank. You’re not fully insured if you’re in a community bank.”
In the past, Yellen led as chair of the Federal Reserve after being nominated by Barack Obama. She was confirmed to the position by a Senate vote of 56-26, making her the first woman to lead the Fed.
She has reportedly insisted that the banking system is stable and that Americans do not need to worry about their deposits. Yellen has also said that Biden is “doing all that he can” to curb inflation.