(CNSNews.com) – A fired-up financial journalist on Monday unloaded on the Biden administration’s promise to give all depositors in two failed banks access to all of their money — even to those with accounts worth way more than $250,000, which is the limit for federal deposit insurance.
President Biden said taxpayers will not foot the bill: “Instead, the money will come from fees the banks pay into the deposit insurance fund,” Biden said on Monday.
“Where do we begin?” Charles Payne asked after Biden spoke:
“First and foremost, for me, that was a bailout of Silicon Valley. Not Silicon Valley Bank — of Silicon Valley. And everyone needs to be clear on that. This was not a bailout of hard-working Americans with small accounts. This was a bank that only catered, for the most part, to Silicon Valley and their customers.
“So how did Silicon Valley (Bank) get so big? All the money that cascaded into our economy at the beginning of the pandemic helped to spur…over a thousand IPOs (initial public offerings),” Payne said. He said 59 percent of those IPOs were SPACs.
(A SPAC, or Special Purpose Acquisition Company, is one without commercial operations that is formed to raise capital through an IPO for the purpose of acquiring or merging with an existing company).
Payne said 90 percent of the SPACs were “pure crap.”
“The others all went out overvalued,” he continued.
“Everyone who bought them at the IPO price — every American is losing money right now, even before this crisis. In the meantime, though, all that money went to Silicon Valley Bank. Their deposits went up 300 percent to $200 billion. The average bank over that same time frame — their deposits went up 35 percent. So they’re living large and having a great time.
“What do they do with the money? They don’t lend it out! They don’t lend it out! Who the hell needs a loan in Silicon Valley? They don’t lend it out. So they put it into different things and start investing with it. Then things look a little dicey, so they say, let’s buy these bonds.”
“Now this is the real tricky part,” Payne said, explaining there are two ways to put bonds on a company’s books.
“One is held to maturity. If you do that, you don’t have to mark the ups and downs of the bond market — you don’t have to mark that on your balance sheets. The ones that are for sale, you do — and you have to actively manage those.
“But the bulk of these bonds that they had were held to maturity. So the fact of the matter is the bond market took one of the worst drubbings it’s ever had in the last year. The value of their bonds, their core asset, started to go down (as interest rates started to rise). Other things that happened — commercial-backed, mortgage-backed securities, they own a bunch of those — those are getting decimated, in part from work-from-home.
“But this was an irresponsible, reckless bank.
“But let’s be clear. The American public must know, every account in this country is insured to $250,000. Every single account. This was not about bailing out small accounts, regular Americans. The mean bank account in this country is $41,000…If you look at, for instance, the average bank account for someone without a high school diploma, 9-thousand bucks. But bachelor’s degree, $79,000.
“This is another bailout of the elites. It’s a bailout of Silicon Valley that just brought us Sam Bankman-Fried. The Silicon Valley that for 20 years grew companies privately to exorbitant valuations, outrageous valuations, and then foisted them on the public at even higher valuations.
“They have made so much money! I mean, only the Saudi Arabian princess can deal with the amount of money that they’ve made. Who do you think bids against each other for the world’s biggest yacht?! Who bought the Maltese Falcon? I mean, this is what I’m talking about.”
Payne concluded that the federal government is essentially rewarding those who “keep wrecking our economy.
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