Neither regulators nor President Joe Biden were able to stop panic on Monday, March 13, brought about by the collapse of the state-chartered commercial bank Silicon Valley Bank (SVB).
Shares of many banks came under extreme pressure with the KBW Bank Index, which tracks the performance of the two dozen largest banks across America, falling by around nine percent midday. The S&P exchange-traded fund that tracks regional banks fell by 9.25 percent.
Biden attempted to calm the markets during his Monday morning speech, claiming that "Americans can have confidence that the banking system is safe," and that the bank regulators and Treasury Secretary Janet Yellen took "immediate" action to stop contagion among small and medium-sized banks following the March 10 fall of SVB.
"They knowingly took a risk, and when the risk didn't pay off, investors lose their money," he said. (Related: According to Biden, "the banking system is safe" – perhaps even as safe as the vaccines.)
But ZeroHedge pointed out that Biden ignored questions about whether there would be a ripple effect and if he could explain how and why this happened. Also, a Breitbart analysis by John Carney noted that there is a clear connection between the spendthrift Biden administration policies and the current crisis.
"The $1.9 trillion American Rescue Plan overstimulated the economy, pushing inflation up to the fastest pace in four decades. Excess savings flooded the banking system, pumping banks like SVB full of what we now see are flight-prone supersized deposits," Carney wrote.
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Carney also cited a previously published paper by the National Bureau of Economic Research (NBER) scholars from two weeks ago, establishing how excess savings fueled inflation. The piece titled "The Trickling Up of Excess Savings" by economists Adrien Auclert, Matthew Rognlie and Ludwig Straub argued that the stock of excess savings fueled inflation and it continues to fuel the bubble. It also pointed out that everyone's spending is someone else's income. So, when households spend stimulus payments, the money does not leave the economy, it just gets transferred.
"Stimulus checks get spent over and over again and eventually, the money stops circulating as quickly because it "trickles up" to wealthier households, who have a lower propensity to spend the additional income. But this trickling-up process takes quite a long time – about five years.
To prove that the current inflation is not brought about by corporate greed and Russia's invasion of Ukraine, Carney referred to a research paper from the New York Fed, which recently found that increased demand accounts for two-thirds of inflation and fiscal stimulus were responsible for half or more of the increase in demand.
Biden blames changes made by Trump administration for the banking collapse
Biden did not only "assure" the public that everything is under control and safe in the banking sector, but he and his Democrat allies also attempted to shift the blame for the crisis onto changes made during former President Donald Trump's administration to bank regulations, specifically the Dodd-Frank Act.
"Congress, the White House? and banking regulators should reverse the dangerous bank deregulation of the Trump era. Repealing the 2018 legislation that weakened the rules for banks like SVB must be an immediate priority for Congress," Sen. Elizabeth Warren (D-MA), wrote in a New York Times opinion piece.
But according to Breitbart, the changes to Dodd-Frank made in the bipartisan legislation that passed in 2018 were rather minor as there was no evidence that they had anything to do with the SVB failure. At the time the bill was passed, Aaron Klein, the policy director of the Center on Regulation and Markets at the Brookings Institute, told NBC News: "This bill enshrines Dodd-Frank into law. The core elements of Dodd-Frank, stricter regulatory scrutiny and higher financial requirements, [remain in place]."
Earlier, a White House release stated that Biden had directed Yellen and National Economic Council Director Lale Brainard to work with banking regulators to address problems at Silicon Valley Bank and Signature Bank, saying that the group has already reached a solution that protects workers, small businesses, taxpayers and the financial system.
Learn more about the collapsing U.S. economy on EconomicRiot.news.
Watch the Health Ranger Mike Adam's March 14 "Situation Update" below that talks about financial doom.
This video is from the Health Ranger Report channel on Brighteon.com.
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Stocks in multiple banks tank after collapse of SVB, leading to several halts in trading.
Silicon Valley Bank has now collapsed, and 95% of deposits were uninsured.
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