New Bank Fees To Cover Bailouts Could Be Passed On To Customers, Experts Say

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The Federal Deposit Insurance Corporation (FDIC) announced a proposal on Thursday to charge new fees to replenish funds spent bailing out Silicon Valley Bank (SVB) and Signature Bank depositors in March that will cost Americans, according to experts who spoke to the Daily Caller News Foundation.

Under the proposal announced at the FDIC Board of Directors Meeting, the regulator would charge special assessment fees to an estimated 113 banks, mostly those with over $50 billion in assets and none under $5 billion in assets. The banks will pass the costs on to their customers, according to economists who spoke to the DCNF.

“The FDIC’s new rule implementing this ‘special assessment’ is, in a word, ridiculous,” E.J. Antoni, research fellow for Regional Economics at the Heritage Foundation’s Center for Data Analysis, told the DCNF. “The FDIC bailed out bad actors and will now ask responsible fiduciaries to bear the cost. Since those costs are passed on to customers, that means you and I are footing the bill.”

The Deposit Insurance Fund (DIF), which the FDIC implements to safeguard bank depositors, was depleted by an estimated $18.5 billion, according to a statement by FDIC Associate Director Michael Spencer at the meeting. The FDIC estimated that it spent about $15.8 billion on covering uninsured deposits because of worries that the banks’ collapses posed systemic risks to the financial sector. (RELATED: FDIC To Slap Banks With New Fees To Cover Bailout Losses: REPORT)

“No losses will be — and I want — this is an important point — no losses will be borne by the taxpayers,” Biden pledged. “Let me repeat that: No losses will be borne by the taxpayers. Instead, the money will come from the fees that banks pay into the Deposit Insurance Fund.”

Spencer said FDIC staff estimates that banks with over $50 billion in assets would cover over 95% of the fees and that none under $5 billion in assets would be impacted.

WASHINGTON, DC – MARCH 29: Federal Deposit Insurance Corporation Chairman Martin Gruenberg (R) testifies during a hearing held by the House Financial Services Committee March 29, 2023 in Washington, DC. The committee heard testimony on responses to the failures of Silicon Valley Bank and Signature Bank. Also pictured is Federal Reserve Board Vice Chair for Supervision Michael Barr (L). (Photo by Win McNamee/Getty Images)

“No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer,” the Treasury, Federal Reserve and FDIC wrote in a joint statement. “We are also announcing a similar systemic risk exception for Signature Bank … All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.”

The special assessment fees charged to lenders will not recover any of the estimated loss of $13 billion related to the collapse of First Republic Bank in May.

“The funds will be taken from insured depositors and will be used to cover payments to uninsured depositors,” Dr. Thomas Hogan, senior research faculty at the American Institute for Economic Research and former chief economist for the Senate Committee on Banking, Housing and Urban Affairs, told the DCNF. “Since the FDIC insures up to $250,000 per person per bank, uninsured depositors are those who hold more than $250,000 in their bank accounts. The regulators are bailing out Silicon Valley billionaires using money from mom-and-pop depositors.”

This article has been updated with comment from Dr. Thomas Hogan of the American Institute for Economic Research.

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