Letter: Too large to fail banks?

Dear Editor,

According to a Moody’s report cited by Bloomberg News on March 27, 2023, small bank lenders lost $109 billion in Core Deposits since Biden guaranteed that depositors of imploded Silicon Valley Bank and Signature Bank of New York would be made whole on all deposited funds at the time of collapse. Ironic that during the same review those same “too large to fail banks” showed an increase in Core Deposits of $120 billion. This was in the first full week post collapse.  

It begs the question: Why would the Federal Reserve committee, which has oversight of FDIC, change the rules established to secure and insure depositors only to abolish them for the benefit of corporate bankers? It appears to be a bogus ploy; A C.Y.A. ruling, to avoid holding Joe Biden accountable for having looked the other way for far too long due to a growing recession originating for enacting myriad of spending policies. 

With the smaller banks having fewer depositors / core deposits, the claim by Biden rings hollow: “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 (Federal) Deposit Insurance Fund (Corporation).”

This might explain how Biden’s claim that only FDIC member banks will need to pay the debt. Yet as water runs downhill, you may have received a notice from your commercial small FDIC bank of notifications pertaining to account changes of new rules and the new service and account fees. You are the same ones who will be picking up the tab for the Federal Reserve billed to your bank.

The very same depositor which Biden claims will not have to pay anything for this, his federal failure. The snowball effect has left a reality check, which undermines the ability of small banks to underwrite consumer affordable loans or mortgages or to maintain viable investment return rates. How long can a customer be loyal to a small bank when they have to pay increased charges to use their own money? 

There are 4,750 community member banks that send premiums to FDIC. Going forward, how does Biden / FDIC / the Federal Reserve plan on dealing with small community banks that may be or become marginally overextended by lack of FDIC charges and/or oversight? Will they again pick and choose who gets a pass and which get full re-compensation on customer deposits?

History should not have to repeat itself. This is a weak link and a major source of the democrats, who perpetrate and support a socialist agenda on a Republic of Constitutional states. The current administration and the department appointments, NOT just in the banking industry, have been allowed to by-pass legislatures by allowing department appointments to hand down rulings and circumvent or give cause to change enacted legislation in a manner of a Socialist country.

It is in the current term of our democrat president and senate (ditto Albany) that cause the fiscal issues of excessive debt and spend to be a priority over application of responsible fiscal accounting practices; these being the same policies that have caused the failed banks. Moreover, the current administrators prioritize legislation for laws and policies that perpetuate even larger tax and spend programs to supplement the failed. 

The priorities by the elected are not the priorities of the majority of the taxpaying populace. Not even those who vote Democrat expected any of what has happened, and can be expected to continue. Inflation is here and will not diminish any time soon with a strong possibility of lost businesses, lost employment, and lost taxable income payers.

If history points to one huge government misstep, it has been within Socialist countries, printing more money and continued spending. A fix this Administration in D.C. and Albany fail to acknowledge let alone fix. These are the steps the Biden Administration continues advocating for with the support of his appointment of Secretary of the Treasury Janet Yellen, whose job is to advise the effects of proposed policies pertaining to our economy.

Federal Reserve Chair Jerome Powell’s guidance is to set rates for banks for the use of government treasury funds and the financial health of FDIC banks and their financial relationships. The red flag is waving high with Biden wanting to continue doubling down once again on spending for his policies, which are currently being debated on the floor of the house.

Sincerely,

Florence Alpert

Candor, N.Y.