Yellen Admits the Fed Won’t Extend SVB-Style Bailouts to Rural Community Banks

LANKFORD Will the deposits ░░░░░░░░ every community bank in ░░░░░░░░ regardless of their size ░░░░░░░░ fully insured now Are ░░░░░░░░ fully recovered Every bank ░░░░░░░░ community bank in Oklahoma ░░░░░░░░ of the size of ░░░░░░░░ deposit will they get ░░░░░░░░ same treatment that SVB ░░░░░░░░ got or Signature Bank ░░░░░░░░ got Yellen Bank only ░░░░░░░░ that treatment if a ░░░░░░░░ of the FDIC board ░░░░░░░░ supermajority a supermajority of ░░░░░░░░ Fed board and I ░░░░░░░░ consultation with the president ░░░░░░░░ that the failure to ░░░░░░░░ uninsured depositors would create ░░░░░░░░ risk and significant economic ░░░░░░░░ financial consequences LANKFORD So ░░░░░░░░ is your plan Yellen ░░░░░░░░ we meet that determination ░░░░░░░░ these two banks LANKFORD ░░░░░░░░ Right So so what ░░░░░░░░ your plan to keep ░░░░░░░░ depositors from moving their ░░░░░░░░ out of community banks ░░░░░░░░ the big banks We ░░░░░░░░ seen the mergers of ░░░░░░░░ over the past decade ░░░░░░░░ m concerned you re ░░░░░░░░ to accelerate that by ░░░░░░░░ anyone who has a ░░░░░░░░ deposit in a community ░░░░░░░░ to say We re ░░░░░░░░ going to make you ░░░░░░░░ but if you go ░░░░░░░░ one of our preferred ░░░░░░░░ we will make you ░░░░░░░░ at that point Yellen ░░░░░░░░ I mean we re ░░░░░░░░ s certainly not something ░░░░░░░░ we re encouraging LANKFORD ░░░░░░░░ is happening right now ░░░░░░░░ That is happening because ░░░░░░░░ are concerned about the ░░░░░░░░ failures that have happened ░░░░░░░░ whether or not other ░░░░░░░░ could also fail And ░░░░░░░░ LANKFORD No it it ░░░░░░░░ s happening because you ░░░░░░░░ fully insured no matter ░░░░░░░░ the amount is if ░░░░░░░░ re in a big ░░░░░░░░ You re not fully ░░░░░░░░ if you re in ░░░░░░░░ community bank Yellen Well ░░░░░░░░ re not fully insured ░░░░░░░░ the big LANKFORD You ░░░░░░░░ were at signature and ░░░░░░░░ was it just barely ░░░░░░░░ that threshold You were ░░░░░░░░ signature Yellen Well we ░░░░░░░░ that there was a ░░░░░░░░ risk of contagion that ░░░░░░░░ have brought down and ░░░░░░░░ runs on many banks ░░░░░░░░ that s something given ░░░░░░░░ our judgment is that ░░░░░░░░ banking system overall is ░░░░░░░░ and sound depositors should ░░░░░░░░ confidence in the system ░░░░░░░░ we took these actions ░░░░░░░░ So there s a ░░░░░░░░ assessment that s been ░░░░░░░░ on community banks in ░░░░░░░░ state and all banks ░░░░░░░░ the country Was there ░░░░░░░░ discussion that that special ░░░░░░░░ would only apply to ░░░░░░░░ larger banks or was ░░░░░░░░ always assumed the special ░░░░░░░░ would cover every bank ░░░░░░░░ rural banks in my ░░░░░░░░ Yellen I I think ░░░░░░░░ I am not certain ░░░░░░░░ the rules are around ░░░░░░░░ That that s up ░░░░░░░░ the FDIC to determine ░░░░░░░░ It has been reported ░░░░░░░░ that SVB had a ░░░░░░░░ number of Chinese investors ░░░░░░░░ are there including some ░░░░░░░░ directly connected to the ░░░░░░░░ Communist Party Will those ░░░░░░░░ will those individuals companies ░░░░░░░░ and investors that are ░░░░░░░░ investors be made whole ░░░░░░░░ on assessments in my ░░░░░░░░ in Oklahoma So what ░░░░░░░░ m asking is will ░░░░░░░░ banks in Oklahoma pay ░░░░░░░░ special assessment to be ░░░░░░░░ to make Chinese investors ░░░░░░░░ from Silicon Valley Bank ░░░░░░░░ Uninsured investors will be ░░░░░░░░ whole in that bank ░░░░░░░░ I suppose that could ░░░░░░░░ foreign foreign depositors But ░░░░░░░░ don t believe there ░░░░░░░░ any legal basis to ░░░░░░░░ among uninsured because of ░░░░░░░░ crosstalk LANKFORD I get ░░░░░░░░ but I I m ░░░░░░░░ saying my community banks ░░░░░░░░ going to pay this ░░░░░░░░ fee It is always ░░░░░░░░ to me as well ░░░░░░░░ conversation that taxpayers are ░░░░░░░░ made whole and this ░░░░░░░░ taxpayers are not going ░░░░░░░░ have any kind of ░░░░░░░░ on this I m ░░░░░░░░ my bankers are going ░░░░░░░░ be very excited to ░░░░░░░░ they no longer pay ░░░░░░░░ and their banks no ░░░░░░░░ pay taxes Credit unions ░░░░░░░░ t pay taxes banks ░░░░░░░░ And so they re ░░░░░░░░ tax payers as well ░░░░░░░░ Yes LANKFORD And all ░░░░░░░░ make their revenue off ░░░░░░░░ rates and fees and ░░░░░░░░ to their account holders ░░░░░░░░ means every Oklahoman will ░░░░░░░░ higher fees in their ░░░░░░░░ bank Yellen If if ░░░░░░░░ we CHAIRMAN We re ░░░░░░░░ re we re just ░░░░░░░░ to have move on ░░░░░░░░ if we have the ░░░░░░░░ of the banking system ░░░░░░░░ its economic consequences that ░░░░░░░░ have very severe effects ░░░░░░░░ banks in Oklahoma that ░░░░░░░░ also be threatened LANKFORD ░░░░░░░░ m I m just ░░░░░░░░ about the long I ░░░░░░░░ just worried about the ░░░░░░░░ term consequences on our ░░░░░░░░ as well CHAIRMAN We ░░░░░░░░ going to have to ░░░░░░░░ on or we re ░░░░░░░░ going to get all ░░░░░░░░