US Bank Bailouts have begin yet again and they are [SERIOUS]ly deceiving us telling us they haven't.

FDIC regulators said that today, "All depositors of this institution will be made whole.” They went further to say “As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.” This is in a way that in the word of the Fed, “fully protects all depositors, both insured and uninsured." The FDIC, Treasury and Fed have all agreed on this.

But we never take bureaucrats at their word. Let us break this down. There is FDIC insurance that covers $250 per person per account type. But SVB has around $160 Billion in uninsured deposits as per SVB's (end of) 2022 annual report. If there is $160 Billion in uninsured deposits, how the heck are ALL deposits guaranteed? There are two answers on the surface, but essentially boils down to the same one.

The first is that FDIC will use the entire pool of FDIC insurance from all banks to cover the losses of this single bank. That is obviously an unfair and even a stupid decision, if you believe that "no losses will be borne by taxpayers". The money has to come from somewhere. They also set up a fund with the Treasury that they "don't expect will have to bet tapped." But this is again, taxpayer dollars.

The possibility and base truth is that if banks fail in excess of FDIC insurance, the money absolutely will come from taxpayers. It doesn't matter if it is from a new or already-stocked Treasury fund like what was like over from Covid for a while, or if funds are borrowed from the Fed, or that the Fed switches the plan and the funds cuts interest rates, allowing the government to effectively borrow more money since the interest payment are now lower, even if they haven't actually issued more treasuries. They can't say depositors will be fully reimbursed if there is no money to reimburse them with, outside of the woefully inadequate FDIC insurance pool. And the only money the government and regulators have is taxpayer dollars.

The point is that they want us to believe that no deposits funds will be lost, so there'll be no (more) bank runs. So they make absurd statements like this that make no sense, unless you actually think about it. It make work, but if banks do fail, that whole line about no use of taxpayer will absolutely mean NOTHING.

There is another bs argument that "The Fed stresses that the backstop will use assets owned by the banks to cover deposits". But we KNOW the low market value of the bank's assets are precisely why the banks failed. The book value of the assets(mainly older treasuries yielding near-0% interest) are not what the market is willing to pay for them(since there are newer treasuries with much higher interest rates). So in the best case, the Fed would be buying the assets off the banks at an above-market price, and will have to use taxpayer dollars to use it,which is PrECiSELY ThE sAmE aS bAiLiNg ThEm ouT WiTh TaxpAyER dOllArs.

And it is amazing how quickly the government and regulators can fully marshal resources to backstop and bailout billions of corporate dollars, since SVB was mainly a corporate bank, but when it's the little guys in 2008, you are on your own and shouldn't have taken risky loans and trusted banks with your deposits. It is AMAZING that they unilaterally decided to close the crypto friendly bank Signature, with media misrepresenting things saying the bank "failed" or "collapsed", while First Republic, was allegedly reported as being in a similar questionable solvency situation to Signature, where they are heavily reliant on deposits and assets backing deposits are scarcely sufficient especially in these times, but they were left alone by regulators. FREAKING AMAZING.

AMAZING. But not surprising. Unfortunately.

https://fortune.com/2023/03/12/all-silicon-valley-bank-depositors-will-be-fully-protected-federal-reserve-janet-yellen-fdic/

https://fortune.com/2023/03/12/nyc-based-signature-bank-fails-closed-by-regulators-fdic-treasury/