The Biden administration has insisted taxpayers will not be on the hook for the recent bailout of SVB, but a Heritage economist says that 'doesn't pass the smell test.'
President Biden speaks with Secretary of the Treasury Janet Yellen during a cabinet meeting in the Cabinet Room.
"The FDIC doesn’t have enough funds to cover these losses," Antoni explained. "If it did, the Federal Reserve would not have had to establish an emergency lending fund on a Sunday evening to backstop the operation. The Fed can simply create the money to cover the losses at these failed banks, which will cause inflation, or the FDIC can do what they did in the last financial crisis and simply get the money from the Treasury, which is a direct cost to taxpayers.
Antoni said that the FDIC will essentially "recoup its losses by increasing the fees it charges to all banks," which still shifts the pain onto taxpayers who those insurance and bank fees are passed onto, meaning the "American people are once more stuck with the tab.
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