Banks Are Sound Says Yellen While Bank Execs Made Bank
Banks Are Sound Says Yellen While Bank Execs Made Bank
Janet Yellen is on record insisting that our banks are sound. Which would be fine and reassuring if we didn’t know that bank execs are and did make bank BEFORE their respective institutions failed spectacularly.
Treasury Secretary Janet Yellen offered firm, upbeat reassurances to rattled bank depositors and investors Thursday, even as American financial institutions and European agencies ordered fresh rescue efforts following the second-largest bank collapse in U.S. history.
By the time her testimony was over, another major institution, First Republic Bank, received an emergency infusion of $30 billion in deposits from 11 banks, according to Treasury. And in Europe hours earlier, Credit Suisse, Switzerland’s second-largest lender, got a promise from the Swiss central bank of a loan of up to 50 billion francs ($54 billion).
If you look at the stocks as a whole, the market hasn’t flexed quite as much as you’d think given the news reports. However, the unease over market conditions that we’ve all been experiencing over the last two years or more with inflation on the rise and the Fed’s very slow and then suddenly aggressive response, understandably led people and companies to pull funds out of those banks and run elsewhere.
Things like this don’t help either when you factor in the issue that SVB and Signature didn’t get support and there are differing messages as to if there were bidders for the SVB auction or if the feds shut down the bidders because REASONS.
Furthermore, as you look above, First Republic gets LOTS of assistance, SVB and Signature get some. But what about the rest of the banks who might have overbalanced and have too many uninsured deposits?? Well…
“Will the deposits in every community bank in Oklahoma, regardless of their size, be fully insured now?” asked Lankford. “Will they get the same treatment that SVB just got, or Signature Bank just got?”
Yellen acknowledged they would not.
Uninsured deposits, she said, would only be covered in the event that a “failure to protect uninsured depositors would create systemic risk and significant economic and financial consequences.”
Now that certainly inspires confidence in the banking system! NOT.
Here’s the issue. People want to put their money where they believe it will be safe, protected, and grow. Furthermore, people and companies do look to banks to help ensure their business is stable and can be provided tools to grow or manage growth. What would you as an individual or business owner think if you see that some banks that are floundering are propped up and others…aren’t.
What does that also say when these same individuals and business owners find out that the bank execs have been quietly making bank weeks and months before their respective institutions they were in charge of …crashed? Fleeing to Hawaii instead of stepping up to deal with the fallout is one choice.
The former CEO of Silicon Valley Bank who sat at the helm of the financial intuition when it collapsed was spotted sauntering in Hawaii Wednesday — as his former colleagues scramble to pick up the pieces.
Greg Becker and wife Marilyn Bautista fled to their $3.1 million Maui townhouse just days after Becker, who was CEO of SVB since 2011, left the firm, photos taken by the Daily Mail show.
Or, how about spending the last few months quietly cashing in on stocks as they likely knew their institution was going under?
Top executives of First Republic Bank sold millions of dollars of company stock in the two months before the bank’s shares plummeted during the panic over the health of regional lenders.
The bank’s chief risk officer sold on March 6, according to government documents. Two days later, Silicon Valley Bank shocked the market and sent other banks into freefall. First Republic was among the worst hit.
Executives had been selling for months, the documents show. Executive Chairman James Herbert II has sold $4.5 million worth of shares since the start of the year. In all, insiders have sold $11.8 million worth of stock so far this year at prices averaging just below $130 a share. The bank’s chief credit officer, its president of private wealth management and chief executive together sold $7 million worth of stock.
Quite honestly, NONE of this inspires confidence in how the Feds are handling this banking crisis. And it sure doesn’t help the regional and local banking institutions that have been doing their best FOR their clients, while it sure seems that entities such as SVB, Signature, and First Republic get a helping hand from the same (and us taxpayers as well).
Speaking of confidence in how Yellen is handling the issue while bank execs cash in… here’s how she responded yesterday.
Just so the Biden Admin's stance is clear:— Will Hild (@WillHild) March 16, 2023
If you're a Silicon Valley VC, a Chinese foreign national, or an unprofitable green start-up – you'll be bailed out.
But if you're a farmer, a factory worker, a small business owner or a local bank that supports them – wait and see… pic.twitter.com/mpghONOYHS
Senator Ron Johnson: "Would you agree those are the top three causes of inflation? Deficit spending, high energy costs, and supply dislocations?"— Townhall.com (@townhallcom) March 16, 2023
YELLEN: "I don't believe the deficit spending is one of the main causes of inflation."
Senator Ron Johnson: "You don't?!" pic.twitter.com/rxCVJtgbMx
Wait WHAT? Our federal government has been spending money and throwing money everywhere for eons. But especially since Covid hit and when Biden stepped into office. But Yellen says deficit spending isn’t adding to our inflation issues?? WOW. That inspires much confidence in how she’s handling the response to the banking issue.
Ultimately, we are stuck watching all of this play out. All the while knowing that Yellen is an idiot and the bank execs who brought this on made serious bank before bailing on their customers.
Feature Photo Credit: Money thrown in air via Pixabay, cropped and modified
I have to keep reminding myself that Janet Yellen has a Ph.D. in economics.
Mail order degree, no doubt!