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In the wake of the deepening banking crisis unfolding in the U.S., Rep. Ro Khanna (D-CA) reportedly said all depositors should be protected and have full access to their accounts by Monday morning regardless of a $250,000 limit.
In an interview with CBS, Khanna said he has great respect for Treasury Secretary Janet Yellen but indicated there needs to be more clarity and greater strength from the Treasury.
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A joint statement by the Treasury, the Federal Reserve and the FDIC said depositors will have access to all of their money starting Monday and that no losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer. Similar terms were also announced for Signature Bank SBNY.
Khanna cited a precedent set during the collapse of the Bank of New England in 1991 when current Fed Chair Jerome Powell was at the Treasury.
“Powell said that Treasury coordinated with FDIC and with the Fed, and they insured every depositor then. And why did they do it? They didn’t want a regional run on the banks,” Khanna said.
Khanna also explained that it would not cost taxpayers money because SVB has the assets and not the liquidity.
“What happened is, they had these long-term treasury bonds, and then the Fed hiked interest rates very, very fast, we can debate the wisdom of that,” he said.
Innovation Pipeline: Khanna said the most hurting factor was the rapid rise of interest rates and systemic risk. “It’s going to hurt the innovation pipeline and it’s going to hurt ordinary people,” he said.
The Democrat said, “the companies that are looking for cures to cancer, the companies that are doing the climate work, the companies that are keeping us ahead of China on AI and defense technology, all of them are at risk.”
Some of them will go under, some of them are going to be laying people off, it’s going to mean people aren’t going to be able to make their rent, he said.
Read Next: Lender Touted By Jim Cramer Strengthens Liquidity Position As Banking Crisis Deepens
Photo via Brookings Institution on Flickr
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Image and article originally from www.benzinga.com. Read the original article here.