When is a bailout not a bailout? It’s a question many people are asking after the dramatic collapse of Silicon Valley Bank and the US’s decision to rescue depositors on Sunday.
Joe Biden, elected and appointed officials all insist the emergency interventions to protect deposits in Silicon Valley Bank, Signature Bank, a second bank that failed on the weekend, or, indeed, any further bank failures, won’t come at taxpayers’ expense.
On Monday, Biden was at pains to say that “no losses” would be borne by taxpayers, and the money would come from the fees that banks pay into the Deposit Insurance Fund.
His comments followed those of Janet Yellen, the Treasury secretary, who told CBS on Sunday: “Let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out, and the reforms that have been put in place means that we’re not going to do that again.”
Jason Furman, chair of the Council of Economic Advisers under Barack Obama, was not convinced. “Regulators probably needed to do what they did to prevent potentially chaotic damage across the economy,” Furman, now a professor at Harvard, said in a tweet. “But make no mistake – it does have an expected cost to taxpayers.”
Even Andrew Ross Sorkin, financial columnist for the New York Times and author of Too Big To Fail, the bestselling book about the 2008 financial crisis, thinks it’s a bailout. “It is a bailout. Not like 2008. But it is a bailout of the venture capital community + their portfolio companies (their investments). That’s the depositor base of SVB. It is the right thing to do in the moment, but there will be ramifications + new regs. VC’s should say thank you,” he wrote on Twitter.
It is easy to see why the Biden
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