President Joe Biden addressed concerns on Monday regarding the takeover of Silicon Valley Bank (SVB) by the federal government and the economy. The move has sparked fears of a potential repeat of the 2008 financial crisis, leading to skepticism from economic experts regarding the government’s claims that taxpayers will not bear any losses.
During his speech, Biden stressed that the depositors’ money will be recovered, and taxpayers will not be responsible for any losses, saying, “the money will come from the fees that banks pay into the Deposit Insurance Fund.”
However, E.J. Antoni, an economic expert at the Heritage Foundation, disagreed with the president’s statement, telling The Center Square, “The deposit insurance fund doesn’t have anywhere near enough liquidity to cover depositors… There is no way around the reality that taxpayers are on the hook here.”
Antoni pointed out that in the event that the FDIC runs out of cash, it would seek help from the Treasury or the Federal Reserve, ultimately leading to taxpayers being responsible for the expense.
SVB’s insolvency has prompted the Federal Reserve Board of Governors to promise that affected depositors will have access to their money this week without any cost to the taxpayer.
Silicon Valley Bank is the largest financial institution to collapse since the 2008 financial crisis, and the situation was compounded when another bank, Signature Bank, was also closed by regulators on Sunday.
The government’s move has raised concerns among critics who fear that the government’s assurances will not be upheld, leading to another taxpayer bailout of the banks.