If “once is precedent, twice is tradition,” then bank bailouts are now tradition – though they might have already been tradition if the 1980s bailout of the savings and loan industry constituted bank bailout number one. In any case, we are definitely now in “tradition” territory when it comes to bank bailouts. I know Joe Biden said what was done over the weekend was not a bailout, but President Biden says lots of things. It may be true that the stockholders of Silicon Valley Bank and Signature Bank will not be bailed out, but:
- Any depositor who deposited more than $250,000 in SVB or Signature will be covered for their whole deposit, not just the first $250,000. That’s a bailout.
- Anybody who owns stock in a bank whose stock might have tanked or might have even gone belly up but for the government’s actions over the weekend in bailing out depositors at SVB and Signature, is getting a bailout, too.
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