On Tuesday’s broadcast of MSNBC’s “Morning Joe,” Rep. Ro Khanna (D-CA) acknowledged that the fees for the Deposit Insurance Fund that is being used to backstop Silicon Valley Bank depositors are ultimately paid by the customers, not the banks. Khanna also argued there should be a clawback of the $3.6 million sold by the bank’s CEO.
During a debate on whether the actions around SVB constitute a bailout, Khanna stated, “I do want to say why this is different from 2008. In 2008, when the banks were bailed out, the money went to the bondholders, the money went to the shareholders. Here, what we’re talking about is a Deposit Insurance Fund, which has about 100 billion. It comes from fees that banks pay into it. And that’s what’s being used.”
CNBC host and New York Times columnist and Editor Andrew Ross Sorkin then cut in to say, “But the banks don’t pay it. The customers pay it, because they pass on the cost of the insurance program to the customer.”
Khanna responded, “We could — sure, but it’s — I just to make sure that people know it’s not going — because I do blame the Silicon Valley executives. I do blame the Silicon Valley board. I do blame the shareholders. I do think it’s problematic that the Silicon Valley CEO sold 3.6 million, now it may have been a scheduled sale, so I’m not saying he did something wrong. But, regardless, there should be a clawback. But none of those people are being protected here. Who’s being protected are the depositors. And by the way, some of those companies, clean tech companies, climate tech companies, A.I. companies, defense tech companies, biotech companies, if you care about the I.R.A. working, if you care about the CHIPS and Science Act working, if you care about the president’s agenda to make sure we’re ahead of China and bring manufacturing back, you’ve got to care about 50,000 of the innovation pipeline. And I guess my point is, yes, we need reform. Banks should pay a higher premium and they should submit to higher regulation and in turn, we should have higher FDIC for companies so that they can make payroll in this kind of crisis.”
Follow Ian Hanchett on Twitter @IanHanchett
COMMENTS
Please let us know if you're having issues with commenting.