Bank Collapses: Yes, It’s a Taxpayer Bailout

Source: Garrison Center
by Thomas L Knapp

“The FDIC is, as its name implies, an insurance proposition. The premiums banks pay are based on the amounts they have in deposits, and an FDIC opinion of how risky the bank’s practices are. Let us now turn our attention to a great film about the LAST big US financial collapse, The Big Short. By way of explaining his pitch for betting that collapse was coming, Jared Vennett (a fictional character based on a real person) tells some investors, ‘I’m standing in front of a burning house and I’m offering you fire insurance on it.’ In the case of Silicon Valley Bank, Signature Bank, and likely other banks to follow, the FDIC is standing in front of burning multi-million dollar houses insured for $250,000 and offering to pay the full value of the houses instead of the amount insured. Who’s covering the difference?” (03/14/23)