Treasure Secretary Janet Yellen admitted to the U.S. Senate on Thursday that “the government is choosing winners and losers in the rigged bank bailout lottery,” writes John Nolte at Breitbart News. “And wouldn’t you know it, the losers sure look like the smaller community banks the big banks (and Democrats) would love to see eliminated.”
Sen. James Lankford (R-OK) asked, “Will the deposits in every community bank in Oklahoma, regardless of their size, be fully insured now? Are they fully covered, every bank, every community bank in Oklahoma, regardless of the size of the deposit? Will they get the same treatment that SVBP [Silicon Valley Bank] just got or Signature Bank just got?”
Yellen replied, “A bank only gets that treatment if a majority of the FDIC board, a super majority of the Fed board and I, in consultation with the president, determine that the failure to protect uninsured depositors, would create systemic risk and significant economic and financial consequences.
Lankford followed up:
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, and I’m concerned you’re about to accelerate that by encouraging anyone who has a large deposit in a community bank to say, “We’re not gonna make you whole, but if you go to one of our preferred banks, we will make you whole at that point.”
Yellen tried to backtrack: “Look, I mean, that’s certainly not something that we’re encouraging,” she said.
Lankford responded, “That is happening right now!”
Yellen said, “That is happening because depositors are concerned about the bank failures that have happened and whether or not other banks could also fail…”
“No, it’s happening because you’re fully insured no matter what the amount is if you’re in a big bank. You’re not fully insured if you’re in a community bank,” Lankford interjected.