Biden Says That Failed Banks Are A Result Of Capitalism

President Joseph Biden tried to reassure Silicon Valley Bank and Signature Bank clients on Monday that their money was secure since it was covered by the Deposit Insurance Fund, but he claimed that investors in the collapsed banks' securities wouldn't receive the same assurance.

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At a speech at the White House on Monday, Biden warned, "Investors in the banks will not be protected. They took the risk intentionally, and when it didn't pay off, the investors lost their money. That is the way capitalism operates.

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The Federal Deposit Insurance Corporation and Federal Reserve will completely protect deposits at both failing banks, according to the nation's top bank regulators, who stated this on Sunday. Wall Street and major financial institutions will shoulder the cost, not the taxpayers. The New York-based Signature Bank, which was shut down on Sunday due to the same concerns about systemic contagion as SVB, had been a well-liked source of financing for cryptocurrency businesses.

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"The FDIC took possession of SVB's assets on Friday and Signature's over the weekend," Biden stated. "Any customers who already had accounts in these banks may do so with confidence, knowing that their funds will be secure and available to them as of right now."

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Both SVB and Signature were classified by the Treasury Department as systemic risks, giving it the power to dissolve both entities. Depositors, a number of whom had substantially more than the $250,000 placed at the banks that is ordinarily covered by the FDIC, will be compensated using the FDIC's Deposit Insurance Fund rather than government money.

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Biden insisted on Monday that taxpayers will not bear any losses. "I'll say it again: Taxpayers won't be responsible for any losses. Instead, fees that corporations charge into to the Deposit Insurance Fund will provide the funding.

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According to a statement released jointly by the FDIC, Federal Reserve, and Treasury Department, any loses to the Deposit Insurance Fund will be compensated by such a special assessment imposed on federally insured banks.

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Following the FDIC takeover, senior management of the banks will be sacked.

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People can trust that the financial system is secure, according to Biden. "Your deposits will be available as required."