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The “rich people” with money in Silicon Valley Bank are the real winners in President Joe Biden’s handling of the California-based bank’s collapse, economist Peter St Onge says.
After the fall of Silicon Valley Bank over the weekend, the Biden administration announced that the Federal Deposit Insurance Corp. will cover all depositors’ money there.
Normally, the Federal Deposit Insurance Corp. is responsible for covering deposits up to $250,000, ensuring that most small businesses and individuals are financially protected from a collapse. But in this case, the FDIC is going far beyond that $250,000 cap to cover every deposit in Silicon Valley Bank, regardless of the amount.
“If the administration gets away with this, then we are going to start moving into a world where bankers, where Wall Street, feels like they can take any risk they like, because this is all going to get bailed out because you’ve got these human shields,” St Onge, a research fellow in economics at The Heritage Foundation, says. (The Daily Signal is Heritage’s multimedia news organization.)
Ultimately, the federal government’s actions to protect Silicon Valley depositors probably will result in higher inflation, St Onge says. “I think we’re very likely to see a lot more inflation,” he says.
St. Onge joins this episode of “The Daily Signal Podcast” to discuss how Silicon Valley Bank collapsed and what Biden’s actions mean for the nation’s economy.
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