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Silicon Valley Bank in California and New York Signature Bank were
both taken over by the Federal Deposit Insurance Corporation over
the weekend. President Joe Biden announced Monday the Federal
Deposit Insurance Corporation took the banks over and management
there will be fired.
And while depositors will be secured through FDIC, bank investors
won’t.
“They knowingly took a risk and when the risk didn’t pay off,
investors lose their money,” Biden said. “That’s how capitalism
works.”
Illinois Bankers Association Vice President of Government Relations
Ben Jackson reiterated Biden’s insistence that taxpayers are not
impacted by the FDIC support of depositors.
“The funds there to backstop Americans’ deposits are funded by banks
so banks pay quarterly assessments based on a very specific
formula,” Jackson told The Center Square.
He doesn’t expect there to be a cascade.
“These were banks that generally had clients that were in areas that
pose some risks such as startups, cryptocurrencies, that type of
thing, and they had situations where depositors pulled out and the
banks didn't necessarily have the liquidity,” Jackson said.
Illinois banks and thrifts are strong, Jackson insisted, and they
are insulated from bank failures in other states. Anyone with
concerns should reach out to their bankers, he said.
“A banker wants their customer to feel secure that their deposits
are going to be insured and that they’re going to be available when
they need them,” Jackson said.
Jackson said the reforms that were put in place since the housing
and banking crisis 15 years ago have helped insulate banks from when
other banks may collapse.
Greg Bishop reports on Illinois government and
other issues for The Center Square. Bishop has years of
award-winning broadcast experience and hosts the WMAY Morning
Newsfeed out of Springfield.
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