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Since March 2023, there have been three major bank failures in the U.S. Under Biden’s leadership, these are three of the four largest bank failures in U.S. history.
According to data from the Federal Reserve, the three banks had a combined $531 billion in assets.
First Republic Bank with $212 billion, Silicon Valley Bank had $209 billion, and Signature Bank had $110 billion and all “imploded in the wake of high-interest rates and poor management decisions.”
Things may very easily get worse amid the likelihood of another interest rate hike by the Federal Reserve.
And guess who is on the hook for it? We, the taxpayers are.
The Federal Deposit Insurance Corporation (FDIC) is estimating that the actions by the Biden administration to bail out the banks will cost American taxpayers $36 billion.
“The Federal Reserve, the Treasury, this entire administration, frankly, has been very inconsistent with their operations in financial markets,” E.J. Antoni, an economist and research fellow at The Heritage Foundation, told Fox News Digital.
“So they will do one thing in one instance and then something completely different in the next.”
“However, if this last episode is any indication, as the federal government gets increasingly desperate in this banking crisis, as the crisis continues to escalate, what we’re seeing is an increasing willingness to basically use taxpayer money to bail out these institutions,” Antoni added.
“Normally we would see larger banks acquiring these regional banks because they’re a good deal right now,” Thomas Hogan, a senior research faculty at the American Institute for Economic Research and former chief economist on the Senate Banking Committee, said in a statement.
“Now that they’ve seen the government is willing to provide assistance, they’re going to wait until the banks are basically failed and then the government’s willing to provide some bailout package in order to make that acquisition possible,” Hogan said.
“That definitely is what happened with First Republic and JPMorgan Chase.”
“It’s a bad incentive. The precedent they’ve set is going to make private banks less willing to acquire or bail out these failing institutions.”
Stephen Moore, a senior economist at FreedomWorks, along with Antoni and Hogan say the bank failures are a result of interest rate hikes brought on by the Federal Reserve.
“A lot of these banks hold government bonds that are now worth — they’ve dropped in value by about 30% because of the huge interest rate spike over the last year. So, their balance sheets look horrible now because of some of the Fed actions,” Moore told Fox News Digital.
“The reason the Fed had to take those actions was because we had this extraordinary spending spree,” he added.
“You had a completely indefensible spending spree after COVID was over. Then you had prices rise. Inflation went to 9%. And then you had the Fed forced to respond to that by this almost unprecedentedly rapid interest rate rises.”
The American Rescue Plan signed in March 2021, a $1.9 trillion Covid-19 stimulus package largely criticized as unnecessary, lead to sky-high inflation.
Inflation went from 2.6% to a 40-year high of 9.1% in June 2022. Inflation has come down to 5% but the Feds interest rate hikes took rates from 0.25% to 5.25% this month.
