House Freedom Caucus Opposes Bank Bailouts

The House Freedom Caucus said in a statement on Monday that they oppose bailing out the banking industry for what should be considered a failure of regulators not to see the coming crisis.

“The House Freedom Caucus continues to stand for the forgotten men and women of America, and Americans are done with government bailouts — especially when caused by the government’s own policies, apparent regulatory failures, and clear management ineptitude,” the group of conservative House lawmakers said in a written statement.

The House conservatives contended that rampant spending under President Joe Biden and “mismanaged” monetary policy by the Federal Reserve created the conditions for the banking crisis that started with the collapse of Silicon Valley Bank. They also called for the Fed to end its “Bank Term Funding Program,” a program created by the Fed to ensure banks can meet the needs of depositors, although some detractors may call it a bailout.

The Freedom Caucus wrote:

Out-of-control spending in Washington and Federal Reserve interventions have fueled skyrocketing inflation. Having mismanaged interest rate policy and their own balance sheet, the Federal Reserve reacted by rapidly increasing interest rates after keeping them artificially low for far too long. The Federal Reserve set the conditions for this crisis and out-of-control DC spending lit the fuse.

The Federal Reserve must unwind its extraordinary “Bank Term Funding Program” as soon as possible. Any universal guarantee on all bank deposits, whether implicit or explicit, enshrines a dangerous precedent that simply encourages future irresponsible behavior to be paid for by those not involved who followed the rules.

The lawmakers wrote that this crisis was also born out of a failure of regulators, not of regulations. They said they would oppose efforts by Democrats to undo the Trump banking reform that rolled back Dodd-Frank regulations for small and medium-sized banks.

Indeed, the Federal Reserve Bank of San Francisco has become a political target for Democrats and Republicans, both contending that the San Francisco Fed failed to address the “risky structure” of Silicon Valley Bank, as explained by Sen. Ted Cruz (R-TX).

Breitbart News’s John Nolte explained how Treasury Secretary Janet Yellen admitted that there is a two-tiered system in banking, where larger banks seemingly get unlimited protections, while smaller and community-sized banks are not offered the same level of protection.

In reaction to Sen. James Lankford’s (R-OK) questioning, Yellen admitted that with the government’s response to the banking crisis, large depositors will likely go to larger institutions that will have government backing over smaller banks, who will have no government protection.

“Look, I mean, that’s certainly not something that we’re encouraging,” Yellen said.

During a Senate Finance Committee hearing, Yellen even said that Chinese investors affiliated with the Chinese Communist Party might be made whole as part of the government’s bailout of Silicon Valley Bank:

C-SPAN

“Democrats want to make all banks ‘too big to fail’ and will drive further consolidation in the financial sector. No bank should be ‘too big to fail,'” the Freedom Caucus statement concluded.