Who is REALLY Paying For the Bank Bailouts?

The FDIC is broke. No, I am not kidding. Look at their website where they show you exactly how much money they have. The deposit insurance fund balance is about $125 billion. That puts their reserve ratio at only 1.26%. That is right, 1.26% is the ratio of how much money the FDIC has versus all the bank accounts that they would need to bail out should they need to do so.

About $125 billion means they do not even have enough to bail out Silicon Valley Bank. But as we know, Silicon Valley Bank just got bailed out. So where is the money coming from? And according to the White House and everybody talking about this, it will not cost the taxpayer a dime. So how are depositors at these failed banks getting a free lunch?
Well, shocker, they are not.

Timecodes
0:00 Video Introduction
1:06 Bank Term Funding Program by Federal Reserve
1:41 Working of the Bank Term Funding Program
3:18 Banks’ Position in Today’s Market
4:51 Short-Term Borrowing Agreement and Collateral Value
6:17 Role of Federal Reserve in Collateral Valuation
7:15 Loan Procedure under Bank Term Funding Program

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#FDIC #BailoutMoney #Recession

[jasontodd]

When something fails there is pain to be felt. The government is choosing who feels that pain and it isn’t the banks who made some ill advised decisions. It is you and I that will feel the pain through continued inflation.

[garyblack]

Already the new CEO of SVB is out trying to recruit depositors "See, Uncle Sam fixed it all up, come deposit your funds again!". With no risk to making poor financial decisions, it's hard to see how banks won't make riskier and riskier bets, knowing the fed is there with a printing press.

[JoshuaNolt]

Sounds like they’re just kicking the Can a year away

[ZoomedOut]

There’s nothing quite like another “temporary government program” that costs the taxpayers nothing…😂😂
RUN DON’T WALK..!!

[dholte]

The banks they like will get this. The ones they don't, will not.

[alanreyes]

Please do create a video on the ramifications of this. Many people say that this will be how the fed ends up owning all the banks. Idk about all that but it would be good to hear your perspective. Thanks!

[deanfinnigan]

Joe, always thankful for your explanations. You have a great skill in communicating these complex arrangements and getting the key parts across. much respect.

[paulpierce]

the nice thing about being broke is i don’t have to worry about my savings vanishing 😂😂😂

[bradspitt]

Dang it all, I've been trying to find someone who could explain this. Finally! Thank you lol

[spitfireap]

Thank you, thank you, thank you for using examples like that car example. It really simplifies things for even those of us who understand these things to some extent but need some additional clarity. Most money guys talk as if everyone in their audience knows the lingo. You are a much-needed down-to-earth resource in this space.

[TalkingGIJoe]

this is how they scoop up assests and saddle we the people with the debt in the form of reduced buying power for our dollars...

[AbsoluteKelvin]

"TEMPORARILY" With government things are hardly ever temporarily

[bkm]

In a few years, we will all realize that pension funds are in a similar situation -- required by law and regulation to invest most of their funds in U.S. Treasuries at their peak price with no hope of ever regaining their full value.

[arizonacouple]

Even years ago the FDIC, FSLIC (now absorbed in the FDIC), and the NCUA only had a combined total of about 2% of the banks', savings and loans' and credit unions' deposits covered. Apparently, this total is even less now that the insured amounts per account have risen over time.
I thought that the mechanisms to control banks runs that were put in place starting in 1933 would be sufficient. I guess not!
One big problem today is that the reserve requirements to cover deposits currently has been reduced to zero.
I also wonder if these new bank runs would not have happened if some people had not sounded the alarm on social media. Did they really have to do it and does anybody gain from it?

[braddeicide]

That money is just to last long enough for the printers to warm up.

[dylanstraub]

When they say it's not going to cost you a cent what they are actually telling you is "Bend over and get ready because you're about to be shafted".

[steelm]

Ok, I still struggle. Where does the 'Bank Term Funding Program' get the money, to loan it to the banks? This money does not exists, right? They have to print new money, which increase the overall money supply - increasing the money supply is inflationary, right?

[andyjohnson]

I'm no longer in the business of giving free loans to the bank. $100 max account balance unless it's debt. Until I am my own bank fully. Then zero for them.

[bonsaitreehouse]

I'm surprised you didn't mention a fundamental change in what happens to shareholders and bond holders. Think about it. It set a precedent that damages the desire for private citizens to own certain stocks or loan to certain companies through bonds. In other words, it s a soft shadow form of nationalizing that bank

[isaiahalleman]

I like you bud. Your a very informed and helpful person. Keep up the great work!