Janet Yellen Admits Community Banks In Middle America Might Not Be Protected Like Silicon Valley Bank | Eastern North Carolina Now

    Publisher's Note: This post appears here courtesy of the The Daily Wire. The author of this post is Ben Zeisloft.

    Treasury Secretary Janet Yellen admitted in a Senate Finance Committee hearing Thursday that the Federal Deposit Insurance Corporation and the Federal Reserve might not guarantee large deposits at small community banks like they did for a failed California bank.

    The vast majority of deposits at Silicon Valley Bank, which offered services to nearly half of the venture-backed technology and healthcare firms in the United States before its collapse last week, exceeded the $250,000 threshold insured by the FDIC. Regulators scrambled to guarantee all deposits at Silicon Valley Bank such that the remainder of the financial system, in which roughly half of deposits surpass $250,000, would remain safeguarded against bank runs.

    Sen. James Lankford (R-OK) questioned Yellen about whether uninsured deposits at community banks in his state "regardless of their size" would likewise be "fully insured." Yellen replied that a bank "only gets that treatment" if supermajorities of board members at the FDIC and Federal Reserve, as well as she and President Joe Biden, decide that "the failure to protect uninsured depositors would create systemic risk and significant financial and economic consequences."

    Community banks typically operate in small geographic areas and focus on the needs of businesses and families in their immediate vicinity.

    Lankford noted that such an approach to deposit insurance has already prompted sizable account holders to move their funds into large financial institutions.

    "We have seen the mergers of banks over the past decade," the lawmaker said. "I am concerned you are about to accelerate that by encouraging anyone who has a large deposit in a community bank to say, 'We are not going to make you whole, but if you go to one of our preferred banks, we will make you whole.'"

    When Yellen said that her agency and other financial regulators are by no means attempting to push large depositors away from small banks, Lankford responded that the phenomenon is "happening right now" because "you are fully insured, no matter what the amount is, if you are in a big bank," while "you are not fully insured if you are in a community bank."

    Yellen, originally scheduled to testify on the budget proposal submitted last week by the White House, started her remarks by informing lawmakers that the Treasury Department, the Federal Reserve, and the FDIC successfully protected all deposits at Silicon Valley Bank and Signature Bank. The assets for account holders at both defunct financial institutions were provided by the Deposit Insurance Fund, which is funded by fees on banks.

    Lankford also expressed concern that community banks in Oklahoma would be forced to pay an additional special assessment to protect the deposits of the "large number of Chinese investors" and "companies directly connected to the Chinese Communist Party" who had accounts at Silicon Valley Bank. Yellen confirmed that all uninsured investors "will be made whole in that bank," including foreign depositors, since there is no "legal basis to discriminate among uninsured depositors."

    Sen. Marco Rubio (R-FL) raised similar concerns in a letter to Yellen which noted that Silicon Valley Bank had partnered with Shanghai Pudon Development Bank to finance startups in China. The lawmaker requested information regarding whether Chinese depositors can "expect to receive federal reimbursements from the Deposit Insurance Fund and other federal relief."
Go Back


Latest State and Federal

Republican presidential candidate Ron DeSantis said during an interview this week that he was willing to pardon former President Donald Trump if the facts of the case showed that he was the victim of political weaponization.
Many Americans believe companies should be more vocal on the topic of racism, according to two surveys released on Wednesday, a reality which comes as many conservatives raise concerns about the impact of diversity initiatives.
Leftist allies of Chicago’s new Mayor Brandon Johnson have proposed a budget plan that would tax the rich and businesses, and would effectively defund police in a city already nearly crippled by crime.
New York City Democratic Mayor Eric Adams has suspended land use review processes, including public hearings with city residents, to expedite the search for housing for illegal immigrants coming to the city.
A bipartisan House bill that would allow Blue Cross Blue Shield North Carolina to reorganize and create a holding company that could transfer billions in surplus policyholder money is on its way to the House Rules Committee after passing in the House Insurance Committee Wednesday.
BlackRock was hit with a federal civil rights complaint on Tuesday in response to the asset management behemoth’s diversity, equity, and inclusion commitments, also known as DEI.
House Republicans issued a subpoena threat to the CIA, escalating their investigation into a letter used to discredit the Hunter Biden laptop story weeks before the 2020 presidential election.
SpaceX CEO Elon Musk said during an interview this week that he has seen no evidence anywhere in the universe that suggests that aliens are real.
Republican presidential candidate Ron DeSantis hit former President Donald Trump during an interview Friday over a “jailbreak” bill that he signed into law as president and for not having control of his own government.


Rep. Marjorie Taylor Greene (R-GA) took another step toward cleaning house at the Department of Justice (DOJ) on Wednesday, seeking to remove from office another high-ranking official she views as politically corrupt.
All families in North Carolina would be eligible for the Opportunity Scholarship Program under a bill that moved through the Senate Education Committee on Wednesday.
The Biden administration official who leads the federal agency that enforces Title IX refused on Tuesday to define a “woman” under oath.
Democrats are growing frustrated with the White House as President Joe Biden appears to be botching negotiation with House Republicans over the debt ceiling.
Senate Bill 49 would affirm parental rights and protect parents’ authority to make decisions regarding a child’s medical and psychological well-being
Rep. Adam Schiff (D-CA) doubled down on Tuesday, calling the just-concluded Durham investigation “flawed from the start” and claiming that it had only begun on the political whim of former President Donald Trump.
NC Insurance Commissioner Mike Causey spoke out against an N.C. House bill that would allow Blue Cross Blue Shield North Carolina to create a holding company in which it could move policyholder money.
A House Republican threw one curveball of a question at Securities and Exchange Commission (SEC) Chairman Gary Gensler, asking the Biden administration official on Tuesday to answer under oath whether he facilitated payment for British ex-spy Christopher Steele’s now-discredited anti-Trump dossier.
Fox News is reportedly set to replace its entire primetime lineup with three of the network’s biggest hosts, according to a new report.


Back to Top