The short version is that the bad lending policies that led to the bank failing still made the people running it rich(er), and because of their mishandling, now we have to cover their losses to save the jobs of the employees of the depositors. The claim that covering these losses out of the FDIC will not result in additional taxpayer money being used is not only immaterial (because its already taxpayer money, its just taxpayer money we already set aside for this purpose), its also unlikely to remain true as more banks domino eachother and eventually the losses we have to cover exceed what's available in the FDIC (and now, the BTFP- see below) funds. FTR- The FDIC already covers all depositors up to $250,000. Any business that lost more than that did so because it was TOO LAZY to just put anything over that into a different account at a different bank so it too would be covered. Also deposits can be privately insured against precisely this happening, clearly these folks didn't. What's more, the 'not a bailout' claim is based on the notion that the new BTFP program will be "offering loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S. Treasuries, agency debt and mortgage-backed securities [MBS], and other qualifying assets as collateral. These assets will be valued at par. The BTFP will be an additional source of liquidity against high-quality securities, eliminating an institution’s need to quickly sell those securities in times of stress." The bank failed (and others are failing) because these assets that we're going to 'value at par' lost most of their value. The assets are still of low value, we're just going to loan based on the original (and now inflated) value. Its like if you bought an $80,000 car, wrecked it and totalled it, and then I give you a loan for $80,000 with your totalled car as collateral. That's stupid. This is just kicking the can down the road. Its not going to work. The govt and the Fed are just hoping you won't notice that their 'not a bailout' scheme will inevitably result in bailouts. Yes, the Latest Bank Bailout Is Really a Bailout, and You Are Paying for It (infowars.com)
Once again, word games and lies. There are too many important progressives and Democrats who had ties to that bank. They couldn't let the chips just fall where they may. (The bank is in the San Francisco Bay Area and focused on the tech industry, so really not surprising) But meanwhile they have to make it LOOK like there was no bailout, because they know all those Democrat voters would be very unhappy if they knew what was happening.
