During a Tuesday appearance on CNN, a former Treasury Department official asserted that the United States’ banks were on the verge of being nationalized in the wake of the collapse of Silicon Valley Bank (SVB) and the Biden administration’s response to the incident.
Speaking with CNN host Kaitlan Collins, former Clinton administration Deputy Treasury Secretary Roger Altman discussed the implication of the government’s response to SVB’s collapse.
“What the authorities did over the weekend was absolutely profound,” Altman argued. “They guaranteed the deposits, all of them, at Silicon Valley Bank. What that really means — and they won’t say it, and I’ll come back to that — what that really means is that they have guaranteed the entire deposit base of the U.S. financial system. The entire deposit base.”
“Why? Because you can’t guarantee all the deposits in Silicon Valley Bank and then the next day say to the depositors, say, at First Republic, sorry, yours aren’t guaranteed. Of course they are,” he added.
On Friday, federal regulators shut down SVB after its stock price collapsed and the bank disclosed a $1.8 billion loss on asset sales, citing high interest rates. The collapse also prompted a run on the bank by customers concerned about losing their money. According to a Sunday announcement from the FDIC in conjunction with the Treasury Department and the Federal Reserve, depositors with accounts at Silicon Valley Bank and Signature Bank — which was shut down by regulators on Sunday — will be able to fully recover their funds.
“So this is a breathtaking step which effectively nationalizes or federalizes the deposit base of the U.S. financial system,” Altman explained. “You can call it a bailout, you can call it something else, but it’s really absolutely profound.”
“Now, the authorities, including the White House, are not going to say that because what I just said of course implies that they have just nationalized the banking system,” he added. “Technically speaking, they haven’t. But in a broad sense, they are verging on that.”
Collins responded by calling Altman’s assertions “remarkable,” which prompted the former Treasury Department official to emphasize that he was not claiming the banks had already been nationalized — they were just “verging on” being nationalized.
“I said they are verging on that because they have guaranteed the entire deposit base,” Altman explained. “Usually the term nationalization means that the government takes over the institution and runs it and the government owns it. That would be the type of nationalization we have seen in many other countries throughout the world. Obviously, that did not happen here. When you guarantee the entire deposit base, you have put the federal government and the taxpayer in a much different place in terms of protection than we were in a week ago.”
Former deputy Treasury secretary, Roger Altman, admits: With SVB, Biden Admin "effectively nationalize[d] … the deposit base of the U.S. financial system … Technically speaking, they haven’t [nationalized the banking system], but in a broad sense, they are verging on that." pic.twitter.com/SBn9SfY3Xm
— Tom Elliott (@tomselliott) March 14, 2023
Meanwhile, some have argued that the Biden administration essentially nationalized SVB to protect their allies.
If this is true, and the WSJ is also reporting it, then this is another Biden scandal. Rather than letting the free market resolve a somewhat ordinary bank collapse, they used the opportunity to nationalize SVB, using tax money to ensure their campaign donors were made whole. https://t.co/TKtvR0eUQQ
— Tom Elliott (@tomselliott) March 14, 2023
