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Biden’s Banking Bust

Posted on Wednesday, March 15, 2023
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by Outside Contributor
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Banking

The failure of three banks in the last two weeks, including Silicon Valley Bank on Friday and Signature Bank on Sunday, is a saga of utter government incompetence. Call these bank collapses Biden’s Banking Busts. The Biden administration has been obsessing on woke causes while banks teeter toward insolvency.

Three days before Silicon Valley Bank collapsed, Treasury Secretary Janet Yellen cautioned that climate change puts the banking industry at risk. Yellen was in la-la land, speculating that future storms and tornadoes could diminish the value of banks’ assets.

Weather is a risk, but she was oblivious to the much more immediate problem facing banks — the plummeting value of the bonds they own. She was heedless to the impending downfall of SVB and possibly several other small banks that had purchased long-term bonds when interest rates were near zero.

In 2022, after doing nothing to tame inflation the previous year, the Federal Reserve hiked rates repeatedly to make up for their previous inaction. Those rapid rate hikes, the most drastic in decades, made the banks’ bonds lose value.

A week before Yellen’s climate change harangue, Moody’s Investors Service  already had delivered bad news to SVB that it was about to be downgraded several notches because its inventory of bonds was not worth enough to repay depositors. A day before Yellen’s loony speech, Federal Deposit Insurance Corp. Chairman Martin Gruenberg also cautioned that the diminishing value of the bonds held by banks meant a $620 billion problem ahead.

The Office of the Comptroller of the Currency, a part of Yellen’s Treasury, is responsible for examining the financial condition of banks. It failed to avert the SVB collapse.

Yellen has been an outspoken activist for climate change, women’s rights and diversity, including appointing the Treasury’s first ever racial equity officer. Apparently, the hordes of bureaucrats working under her are also too busy with diversity, equity and inclusion seminars to prevent banks from failing.

As the SVB crisis unfolded, Yellen was MIA. Now she says she’s monitoring several banks “struggling with the whiplash in prices” of their bonds.

Financial experts warn smaller banks are in for a rough ride, though the big banks like JPMorgan Chase, Bank of America, Wells Fargo and others are not apt to be in trouble.

Admittedly, SVB’s managers made mistakes. Banking’s first rule is that assets should match deposits. If depositors can demand their money back anytime, then using their money to buy long-term bonds is risky. SVB had to sell $21 billion worth of bonds at a fire sale, taking a $1.8 billion loss.

Trading was suspended Friday in the stocks of several small banks whose share prices plunged on fears they were in the same situation. On Sunday, New York bank regulators shut Signature Bank.

President Joe Biden created the perfect storm for what may become a string of banking busts. In 2021, he lied about inflation, saying it was temporary and “no serious economist” considered it a threat. Yellen and Federal Reserve Chairman Jerome Powell, whose first term was about to expire, went along with Biden and did nothing to bring down prices. It was the single biggest monetary policy mistake in half a century.

Then in March 2022, newly reappointed Powell launched aggressive rate hiking to cure what the Wall Street Journal called “a mess largely of the Fed’s own making.” As rates rose fast, startup companies could no longer afford to borrow, and instead started withdrawing their bank deposits. Without regulatory intervention, the downfall of SVB was almost a foregone conclusion.

On March 7, Powell predicted that the Fed will likely “increase the pace of rate hikes” to continue bringing down inflation. A task made more difficult by our spendaholic president’s budget proposal, which is an inflation accelerator.

As rates rise, more banks could be in trouble. Continued government incompetence is not an option.

Mr. President, get rid of your woke minions and appoint competent people. Our money and jobs are at stake.

On Sunday night, Biden said he’s “firmly committed to holding those responsible for this mess fully accountable.” Look in the mirror, Mr. President.

Instead, he’s looking at the list of Democratic campaign donors and scurrying to bail them out. Ninety-eight percent of all political contributions from people who worked at internet companies went to Democrats in 2020. Silicon Valley residents coughed up nearly $200 million for Democrats. No surprise that the Treasury and the Fed are offering bailouts, whether they use that word or not.

Biden’s reckless spending and incompetent monetary policy are causing this string of banking busts. And John Q. Public will end up paying one way or another.

Betsy McCaughey is a former lieutenant governor of New York and chairman of the Committee to Reduce Infection Deaths. Follow her on Twitter @Betsy_McCaughey.

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Don
Don
1 year ago

Kudos???? to you all.

George Washington's Admirer
George Washington's Admirer
1 year ago

Biden & Company announced yesterday how everything was just perfectly fine. What kind of glasses are the democrats/communists looking through? There is REALITY then; there is Biden & Company. They tell us that inflation has improved. They tell us the banking situation is under control. How does it look under control? The European Banks Dived Today! How has the situation improved? HOW? Again, there is REALITY & then, there is Biden & Co. Its got to be the worse administration to date. God Bless & Protect These United States Of America!

David Millikan
David Millikan
1 year ago

I warned you all in November 2022, this was coming and it will continue for complete crash across the board.
Don’t worry though. biden will pull a obama and bail them out with our tax dollars so he can raise taxes more and give the CEO’s their million dollar bonuses just like obama did.
biden following obama’s policies and look what happened.

Ann S
Ann S
1 year ago

The people are always the donors to the rich when they lose money. It is never the other way around. And now with the communist regime in the White House these elites are getting richer and richer. That is the only way the democrats can keep power. This bailout is not a bailout but it is a bailout. Just dem doublespeak or should I say lies. For the last 2+ years I haven’t heard one honest word come out of this so called leader of the free world. Ever.

Jane C Dewberry
Jane C Dewberry
1 year ago

I certainly hope all the dim-witted, uninformed amadans who voted for Biden* and his cabal of criminal thugs are happy now. They claim they want equity for all–well, now it appears their misguided wish is coming true. With the progressive socialist agenda of the present administration, it seems we will all be “equally poor”–except, of course, those on the top rung of the financial ladder. You know the ones I’m talking about–the major crime families of the progressive left, i.e. the Biden crime family, the Clinton crime family, Bill Gates, George Soros, Klaus Schwab, and the top executives at the Silicon Valley Band who got a ton of cash by selling their bank shares before the disastrous closure of their own institution. Are you, my fellow citizens, starting to get the picture? These folks don’t care what happens to us, the “serfs” of this country, as long as they can accumulate their masses of millions. Yet, it seems that too many of us still continue to worship these false gods for the very reasons we should be attempting to topple them from their positions of power. Let’s face it–these oligarchs only have the power because we allow it and there are more of us than there are of them. Our power lies in our ability to refuse what they’re offering. So, we can either kowtow to them or we can offer up a silent, non-violent revolution of non-compliance. Your choice.

BAE
BAE
1 year ago

Tell me the democrats are not for the richest people in our country. Now banking welfare; all paid for by the American taxpayer. Since Joe Biden has been in office, the US is a different country. What a disgusting liar of a president. What’s next?

Joey Mize
Joey Mize
1 year ago

And I thought Watergate was the biggest mess I had ever heard or seen. Wow, Biden & Co.has the bull by the horns don’t they? It is just a matter of time before that Bull takes a big hunk out of this bunch and leaves for points unknown. Biden & Co.hummmmm? Best thing for the majority of that bunch is to pack it in and head for home or as the Bull, points unknown. California is looking pretty appealing these days??? 89% populis of illegal immigrants, and 11% tax payors. FOR NOW !!!! Arizona and Utah and Oregon will soon have much greater populations due to the Exit of most law-abiding folks from that place. George you must be proud, Your policies and methodology are having a huge impact on the country. It may not last another 2 years, then your socialist can take over and kill off the rest of us. If we had the chance to VOTE tomorrow for President we be able to stop this but as I see it there is too much time left for them to do their worst and it has yet to even scratch the surface. Should we ever find out just how bad they have been GERGE and CO. / Biden & Co. we may not care anymore. I am sure that is exactly what they are counting on. MAY GOD BLESS AMERICA we are certainly going to need it.

Ron St. Martin
Ron St. Martin
1 year ago

The real problem is the people who vote and support the liberals and swampy Republicans, are too busy looking at social media, watching sports and television. Actors and athlete’s contribute no real worth to society other than to entertain, but are paid more than anyone who actually contributes to society. People treat these nonessential whiners and dregs like gods. Praise the RealWorkers, 1st Responders, Medical, Military, and the many others who contribute. Instead of watching NCAA, play Basketball or other games with your families. If people actually spent time to get information from a mixture of sources they might actually see the truth, but most do not want to know the Truth. The Truth is most Politicians are corrupt and don’t care about the People who elect them over and over again. Until everybody Wakes Up, and stops being Woke Up we are SCREWED!

John McCormack
John McCormack
1 year ago

The President has to go. Remove all his appointees and let’s start fresh. Put competent people in their places. We, as a people, have waited too long. Biden is not in his right mind. He is controlled by his staff and the countries of China and Russia. I don’t know what they have on him, but it must be big.
Confiscate all the money he has received from illegal dealings and stop the flow of our technology to these Countries.

Pegret
Pegret
1 year ago

Yea, right! Let’s blame everything wrong in the world on climate change. Yellen is making excuses ahead of time so she’ll have something to fall back on when something else comes down on her head. Then she can say “I told you so!” “See, it’s not my fault!”

Jmac
Jmac
1 year ago

When you come to the understanding that this has all been planned, the collapse of the US economy, then it and all the events for the past several years start to make sense. The big question is how far will it go? Is there a conservative majority who will intervene before the ultimate collapse and ushering in of socialism to the USA, i.e. The Great Reset.

tlanger
tlanger
1 year ago

Question one: Why are the banks from CA and NY?
Two: Remember Ken Lay and Enron. They hid bad things before filing the bad news after selling stock, and he did the perp walk. Where are these two bank CEO’s and top brass?

Philip Hammersley
Philip Hammersley
1 year ago

Banks “run” by woke DIMMs who donate money to DIMM politicians–what could possibly go wrong?

Moses
Moses
1 year ago

Tucker Carlson says this is all just so the gov’t can move us all to digital banking. I think all of the lunatic decisions made by this administration, who ever is running it, is for the gov’t to seize the banks, the oil companies and what ever other industries they want gov’t to own and control. The free market economy is too much freedom for the people to have. They want total control, they look incompetent, but if they accomplish their goals we may all see they knew what they were doing and there is nothing we can do about it.

Letts Brandon
Letts Brandon
1 year ago

For those of you who don’t know the Great Depression of the ’30s was a government planed event to strengthen the government.Now a quick poll.If you were to find Joe Biden lying dead in a ally would you?A) bury him?B) ignore him?C) Pee on him?

pete
pete
1 year ago

Saw a meme with thumbnails of the Cabinet; looks like refugees from a freak show. If an odd character is competent, let them have the job, but qualification for the job shouldn’t include being an odd character. this cabinet comes from a dance of the macabre.

Patriot Will
Patriot Will
1 year ago

It’s disgusting how many of our banks are more concerned with alternative sex pronouns instead of efficiently run banks. There is absolutely no good reason for bank managers and supervisors to do anything other than focus on the way that a bank is lending and investing monies. Banking should be a very disciplined and intellectual undertaking. Logical bank customers want to feel secure that their bank is run by the best and the brightest.

phoenix
phoenix
1 year ago

There are a ton of problems with SVB. and the governemnt regs that were removed by congress to allow then to do this stupidity

  1. They didn’t act like a bank at all. Its pretty obvious they were not doing their jobs at all
  2. Glass stegal was changed and dodd frank was gutted even before the law was even WRITTEN

Given where we are heaeded with a CBDC really any true SAVINGS you have should be removed fro the system and held in siver, gold and whatever tangibles you desire. hide out there until they get a new currency figured out.

Debt levels are too high everywhere. There is no way the fed to get a handle on inflation because they can’t raise anymore. They did just as I knew they would the rose rates until something broke.

the dollar only has about a penny left in value

Vote with your money GET IT OUT OF THE SYSTEM AND IN YOUR HANDS ASAP
if your don’t hold it your don’t own it. It will at the very least give you OPTIONS when all choice is removed with a CBDC. Not cash not dollars tangibles.
They cannot paper over this although they will try.

johnh
johnh
1 year ago

This article does not address the real problem : And that is the Bank management & I assume they must have a board of directors. They should understand economics & interest rates much better than the average citizen.

Daphne Krueger
Daphne Krueger
1 year ago

This has nothing to do with climate change!!!!!

nick
nick
1 year ago

Study British history and you will know what comes next. The British empire was overextended in the late 1900s financially. Germany was a rising power. The only thing left to do was start a war. Get ready to sacrifice your kids folks.

BAE
BAE
1 year ago

I still can’t believe all of these RICH people get bailed out again and again. Unbelievable .

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