Well, This Won't Stop Bank Runs
On Thursday, March 16, 2023, US Treasury Secretary (and former Charwoman of the Federal Reserve) Janet Yellen testified before the US Senate Finance Committee. Her testimony to Senator Lankford wasn’t confidence boosting.
Senator Lankford is a Republican from Oklahoma.
Time: 1:30:32. https://www.youtube.com/watch?v=CX6O--sk48A
Lankford: Will the deposits in every community bank in Oklahoma, regardless of their size, be fully insured now? Are they fully recovered? Every bank, every community bank in Oklahoma, regardless of the size of deposit, will they get the same treatment that SVB bank just got or Signature Bank just got?
Yellen: A bank only gets that treatment if a majority of the FDIC Board- a super majority-, a super majority of the Fed Board, and I in consultation with the President [of the USA], determine that the failure to protect uninsured depositors would create systemic risk and significant economic and financial consequences.
Lankford: So what is your plan to keep large depositors from moving their funds out of community banks into the big banks? We have seen the mergers of banks over the past decade. I’m concerned that you’re about to accelerate that by encouraging anyone who has a large deposit at a community bank, to say, “we’re not going to make you whole but if you go to one of our preferred banks, we will make you whole at that point.”
Yellen: [stammering] Um. Look. I mean, we’re, that’s certainly not something that we’re encouraging-
Lankford: [Interuppting]-That is happening. Right now.
Yellen: That is happening because depositors are concerned about the bank failures that have happened and whether or not other banks could also fail.
Lankford: No. It’s happening because you are fully insured no matter what the amount is if you are in a big bank. You’re not fully insured if you’re in a community bank.
Yellen: You’re not fully insured.
Lankford: You were at Signature [Bank] and it just barely met that threshold. You were at Signature.
Yellen: Well, we felt that there was a serious risk of contagion that could have brought down and triggered runs on many banks. Um, and, that’s something, given that our judgement is that the banking system, overall, is safe and sound. Um, depositors should have confidence in the system.
On Thursday, March 16, 2023, US Treasury Secretary (and former Charwoman of the Federal Reserve) Janet Yellen testified before the US Senate Finance Committee. Her testimony to Senator Lankford wasn’t confidence boosting.
“Centralization of credit in the hands of the state, by means of a national bank with state capital and an exclusive monopoly.” -5th Plank of Communism per the Communist Manifesto by Karl Marx.
