Janet Yellen says more bank bailouts could be coming

By Casey Harper (Centre Square)

US Treasury Secretary Janet Yellen said on Tuesday that more bank bailouts could be coming.

Yellen made the comments as part of his prepared remarks at the American Bankers Association meeting in Washington, D.C. His comments come after the federal government stepped in to shore up the collapse of regional banks in recent days, raising concerns concerns about the economy and the federal government’s role in helping troubled financial institutions.

Yellen referred to the “rapid response” to help these banks with federal funds. She said, however, that the efforts “were not focused on helping specific banks or categories of banks.”

“Our intervention was necessary to protect the entire US banking system,” she said.

Yellen raised her eyebrows with her next statement.

“And similar action might be warranted if smaller institutions experience deposit runs that pose a risk of contagion,” Yellen said, noting that similar action for other banks may be forthcoming.

Yellen also attempted to restore confidence in the economy.

“Things are stabilizing and the US banking system remains strong,” she said.

Related: Yellen responds to Biden’s budget tax hikes and IRS spending

President Joe Biden has repeatedly stressed that taxpayers will not be required to bail out banks.

Critics, however, questioned these comments.

“The deposit insurance fund doesn’t have enough cash to cover depositors,” said EJ Antoni, an economist at the Heritage Foundation, at The Center Square. “If that were the case, the Federal Reserve would not have had to announce an emergency lending fund to meet the demand for liquidity.

There is also a dispute over the term “bailout”.

“There is no way around the reality that taxpayers are responsible here,” Antoni added, like The Center Square previously reported. “When the FDIC runs out of cash, it just goes to the treasury for more, as we saw in 2009. There are three ways to pay for it. First, the FDIC can increase its insurance premiums charged to banks.

“But those fees that fund the FDIC are fully passed on to customers,” Antoni added. “The second option is for the Treasury to simply give the money to the FDIC instead of loaning it out, in which case the taxpayer is directly responsible. Finally, the Fed can finance the expenditure by simply printing money, causing inflation, which is a hidden tax.

Syndicated with permission from The central square.

Read more : Biden Treasury Sec. Yellen says economy is in new phase of ‘recovery’