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

‘Bank only gets that treatment if [we] determine that the failure to protect uninsured depositors would create systemic risk and significant economic and financial consequences’
By Grabien Staff


LANKFORD: “Will the deposits in every community bank in Oklahoma regardless of their size, be fully insured now? Are they fully recovered? Every bank, every community bank in Oklahoma, regardless of the size of the deposit, will they get the same treatment that SVB just got, or Signature Bank just got?”
YELLEN: “Bank only gets that treatment if a majority of the FDIC board, a supermajority, a supermajority of the Fed board and I in consultation with the president determine that the failure to protect uninsured depositors would create systemic risk and significant economic and financial consequences --”
LANKFORD: “So what is your plan --”
YELLEN: “-- and we meet that determination to these two banks.”
LANKFORD: “Right. Right. So -- so what is your plan to keep large depositors from moving their funds out of community banks into the big banks? We have seen the mergers of banks over the past decade. I'm concerned, you're about to accelerate that by encouraging anyone who has a large deposit in a community bank to say, 'We're not going to make you whole, but if you go to one of our preferred banks, we will make you whole at that point.'“
YELLEN: “Look, I mean, we're -- that's certainly not something that we're encouraging.”
LANKFORD: “That is happening right now.”
YELLEN: “That is happening, because depositors are concerned about the bank failures that have happened, and whether or not other banks could also fail.”

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