Given the opportunity to grill the treasury secretary about her department’s handling of one of America’s biggest bank failures, Sen. Maggie Hassan (D-N.H) used Janet Yellen’s appearance before the Finance Committee to praise the Biden administration’s bank bailout.
Secretary Yellen appeared before the Senate Finance Committee on Thursday, answering questions about the administration guaranteeing all deposits at Silicon Valley Bank and Signature Bank. Doing so abandoned the $250,000 FDIC insurance cap and gives a government rescue to multi-million dollar deposits made by some of the nation’s wealthiest tech millionaires and their companies.
Senate Finance Committee member Sen. James Lankford (R- Okla.) questioned whether customers of small banks in a rural state like his could expect the same treatment. Yellen acknowledged they would not. Uninsured deposits at other banks would only be protected if the Treasury Department decided the bank was “systemically important.”
Yellen assured the committee “that our banking system remains sound, and that Americans can feel confident that their deposits will be there when they need them.” As she spoke, some of the nation’s largest banks were pouring $30 billion into First Republic Bank so it could ride out a run. The bank caters to affluent customers in Boston, New York, and the San Francisco Bay area.
When her time came to question Yellen, Hassan said she wanted to talk about “the recent actions the administration has taken to protect our economy.”
“Last weekend, the Treasury and other agencies took several steps to strengthen public confidence following the failure of two banks,” Hassan said. “The priority of federal regulators needs to continue to be protecting families and small businesses by ensuring the stability of our banking system and our economy more broadly.”
Gov. Chris Sununu (R) has a very different view of how the Biden administration handled the SVB case.
Asked on WGIR radio if depositors should have been made whole over the $250,000 covered by insurance, Sununu said no.
“The people with more than $250,000 in this bank, these were millionaires, they knew the risks. They’re big boys,” Sununu said. If the government is going to guarantee deposits without limit, “it’s like nationalizing the banks,” which will result in high-risk banks like SVB taking even more risks.
And Sununu disputed the claim made by Hassan and others that the bailout protected “families and small businesses.”
“It’s not the Salem co-op, right? We’re talking about millionaires. There were no ‘mom and pops’ putting their money into these banks. This [bailout] is telling all the millionaires, ‘Hey, we’re gonna back your play.'”
That is treatment average Americans don’t get, Sununu said. “Is the government going to back my 401(k) when I invest in stocks or something like that?”
Hassan received at least $1.8 million in donations from securities and investment industries during her 2022 reelection campaign. She was also one of the largest recipients of campaign cash from disgraced tech mogul Sam Bankman-Fried, who is facing charges of using stolen money to fund donations to candidates like Hassan.
Hassan has announced she intends to return the Bankman-Fried donations once she raises enough in new donations to make up the loss.