‘Billionaire’s Rescue’: FDIC Chairman Says Biggest SVB Deposit Accounts Hold $13 Billion

Jake Johnson, staff writer Common dreams.

In prepared testimony to the Senate Banking Committee hearing scheduled for Tuesday morning, the chairman of the Federal Deposit Insurance Corporation reports that the top 10 deposit accounts at Silicon Valley Bank had a total of $13.3 billion, likely adding to criticism of federal regulators’ intervention in the firm’s recent collapse.

As the SVB spiraled earlier this month, the FDIC, the Treasury Department and the Federal Reserve rushed into to support the financial system and make all savers in a California bank whole, including those with accounts in excess of $250,000—the total amount normally covered by FDIC insurance.

“In SVB, depositors protected by the uninsured depositor guarantee included not only SMB clients, but also clients with very large account balances,” FDIC chief Martin Grunberg writes in a report. prepared testimony. “The top ten SVB deposit accounts combined had $13.3 billion.”

Grunberg further estimates that $125 billion FDIC Deposit Insurance Fund (DIF), which is funded primarily by contributions to insured banks and “supported in the full faith and confidence of the Government of the United States”, suffered a $20 billion loss as a result of SVB intervention.

According to Grünberg, nearly 90% – $18 billion – of DIF’s SVB-related losses “are attributable to the cost of covering uninsured deposits.” He added that DIF covered approximately $1.6 billion in costs to cover uninsured deposits at Signature Bank, which went bankrupt shortly after SVB.

FDIC chairman testifies as federal regulators continue to come under scrutiny egregious oversights ahead of the collapse and backlash against the emergency response, which many have described as salvation for the rich and connected given SVB’s role as a major lender to venture capital and tech start-ups.

Billionaire Peter Thiel, whose firm was accused of facilitating the opening of the bank he ran client consulting to get your money out of SVB, said Financial Times that he had $50 million in a personal bank account when he went bankrupt earlier this month.

“This bailout has really protected billionaires from a modest haircut,” Matt Stoller of the American Economic Freedom Project. tweeted in response to Grunberg’s testimony.

In an article for The American Prospect on Monday, Revolving Door Researcher Dylan Gyauch-Lewis called the swift action of the federal government after the failure of the SVB “is a good illustration of the huge class bias in American politics.”

“Once corporations and the wealthy are in trouble, the elites stumble, throwing aside both law and precedent to save them,” Gjouch-Lewis wrote, noting that federal regulators should have classified the collapse of the SVB as a “systemic risk” to the economy. the financial system—a controversial characteristic—in order to legally guarantee deposits of more than $250,000.

In contrast, Gyauch-Lewis added, “Consider student loan forgiveness. The legal rationale is clear as day, and the authority itself is used regularly. Under the Higher Education Student Assistance Opportunities Act of 2003, the Department of Education may forgive student loans at its discretion in the event of a national emergency.”

“Basically, the main reason the SVB savers were bailed out had nothing to do with moral or even financial hazards,” says Gyauch-Lewis. “This happened because they had rich and influential friends who were on the hearing of the head of the presidential administration. Broken students – no. Students have to organize and campaign for decades to get something far worse than they wanted and have it hanging by a thread in the Supreme Court. All SVB contributors had to do was tweet and make a few calls.”

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