Will Taxpayers Be On The Hook For Bank Bailouts?

Image Credit: The White House / Facebook

The Center Square [By Casey Harper] –

President Joe Biden on Monday promised that taxpayers would not be on the hook to bail out banks that collapsed in recent days, a claim disputed by a host of critics.

The federal government decided to take over and back up the banks, allowing depositors to retrieve their money, even if the bank doesn’t have it.

“No losses will be, and I want, this is an important point, no losses will be borne by the taxpayers,” Biden said. “Let me repeat that: No losses will be borne by the taxpayers. Instead, the money will come from the fees that banks pay into the Deposit Insurance Fund.”

Critics are raising serious doubts about the truthfulness of that claim.

“The deposit insurance fund doesn’t have anywhere near enough liquidity to cover depositors,” E.J. Antoni, an economist at the Heritage Foundation, told The Center Square. “If it did, the Federal Reserve would not have had to announce an emergency lending fund to meet the demand for liquidity.

“There is no way around the reality that taxpayers are on the hook here,” he added.

Silicon Valley Bank collapsed after capital issues and a bank run last week and was taken over by government regulators.

The banking issues quickly drew comparisons to the big bank bailouts of the 2008 financial crisis, where taxpayers shelled out hundreds of billions of dollars to bail out banks and stimulate the economy during the recession primarily caused by those banks.

SVB is the largest financial institution to collapse since that crisis, and the issue worsened when another bank, Signature Bank was also closed by regulators on Sunday. 

Out of fear of economic fallout, The Federal Reserve Board of Governors has pledged to ensure SVB’s affected depositors have access to their money this week, despite the bank’s insolvency. The Board also promised no cost “will be borne by the taxpayer.”

Antoni pushed back on that claim.

“When the FDIC runs out of cash, it simply goes to the Treasury for more, as we saw in 2009. There’s three ways to pay for that,” Antoni said. “First, the FDIC can increase its insurance premiums charged to banks. But those fees that finance the FDIC are passed entirely on to customers. The second option is for the Treasury to just give the money to FDIC instead of loaning it, in which case the taxpayer is directly responsible for it. Lastly, the Fed can finance the expense by just printing the money, which causes inflation, which is a hidden tax.”

About the Author: Casey Harper, The Center Square D.C. Bureau Reporter – charper@centersquare.com ~ Harper is a Senior Reporter for the Washington, D.C. Bureau. He previously worked for The Daily Caller, The Hill, and Sinclair Broadcast Group. A graduate of Hillsdale College, Casey’s work has also appeared in Fox News, Fox Business, and USA Today.

5 thoughts on “Will Taxpayers Be On The Hook For Bank Bailouts?

  • March 14, 2023 at 5:44 pm

    Exactly! The taxpayer footing the bill again so that the politically connected are protected.

  • March 14, 2023 at 7:18 pm

    If anyone believes what feckless Obiden is saying, I have some beach front property in Tennessee I would like to sell. I just hope that the House stops this bailout. The only money that should be paid is the amount insured By FDIC.
    Stop this crazy feckless fool. He doesn’t spend the illegal money his son took from China, Russia, and all of the other foreign Countries. He thinks he has an open check book with the tax payers.

  • March 15, 2023 at 1:51 am

    Consumers will absolutely pay for the bailout of these banks that operated out of the norm, through increased FDIC insurance premiums charged to banks. Had the banks operated in a traditional environment in this state, I seriously doubt that ALL deposits over and above the $250,000 insured limits would have been paid.

  • March 15, 2023 at 12:00 pm

    Every word that comes out of this Commander in Thief is a lie Period. He should be charged with treason how he and his family have sold out America. Despicable.
    In God we trust not government or man.
    Have a blessed day.

  • March 17, 2023 at 4:31 pm

    Of course, we are always “on the hook” for EVERYTHING! The Demonrats love robbing us blind while they boldly lie to our faces 24/7. Biden is and always has been a pathological LIAR and plagiarist. The biggest criminal, grifter and pedophile that cheated his way into the Oval Office. He is a sock puppet whose strings are pulled by the former Bath House Barry Admin because his brains are mush and is being propped up by a cocktail of pharmaceuticals to hide his obvious dementia. Nice of Barry to continue his destruction of our country while he let’s “the old white man” take the blame and go down as the POTUS who destroyed the USA.


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