(CNSNews.com) – Rep. James Clyburn (D-S.C.) said Wednesday that the Biden administration is not bailing out anyone despite his announcement that the government will guarantee deposits over the FDIC’s limit of $250,000 at two failed banks - Silicon Valley Bank and Signature Bank.
The congressman said we dodged a bullet on regional banks.
“I think so. I certainly hope so. One of the few things that you may not know about me, probably a lot of things you don't know about me, but I served on the bank board here for almost -- I guess about 14 years before I came to Congress,” he told Fox News’ “Your World with Neil Cavuto.”
“I served on two of the predecessor banks that are now part of Bank of America, and so I know the banking industry pretty well. I do believe things have stabilized thanks to the quick action of the Biden administration to step in, to protect not just the banks but to protect the depositors. That's the way it ought to be done,” Clyburn said.
“The last time we were here in I guess September 2008, when we had a situation like this, things went awry. Congress stepped in, but we stepped in basically to bail out the banks. This administration is not bailing out anybody. What they're doing and the way they're doing it is to protect everybody,” he said.
Host Neil Cavuto pointed out, “Yeah, but they are bailing out people, right, congressman? They're bailing out people with FDIC backing limitless, not just $250,000, but for individuals, $500,000 for couples and setting a precedent somewhat calls for protecting investors out fully. I'm wondering if you had to play that out, with more banks that could go belly up that could get very, very expensive.”
“Well, it could,” Clyburn acknowledged. “Remember now, this is not what I call a bail-out. A bail-out is when Congress gets together as we did in 2008, appropriate billions of dollars and bail the banks out. What is happening here is the process that was put in place with FDIC. They're there in order to protect the banks and those depositors are being protected.”
Cavuto asked whether that set a precedent. However, Clyburn said, “Well, I don't know that this is a new standard. We're going to increase that. The $250,000 per depositor now, I remember when it was only $50,000 per depositor.”
Cavuto pointed out that it raised the issue that it wouldn’t have been done if it were just some obscure regional bank in Wyoming. Instead, some of these are multi-million dollar accounts at a Democratic friendly bank.
“We have small regional banks here in South Carolina. I don't have to go to Wyoming, and I know some of those banks. I know their board members. I know their presidents,” Clyburn said.
When asked whether politics had anything to do with it, the congressman said, “Absolutely not. Those small banks down here in rural South Carolina, 90% of them are Republicans.”
Cavuto noted that Silicon Valley Bank is “a venture capital institution” whose members mostly donate to Democrats. “A cynic would say this is a party favor,” he said. “Are you saying that is not the case?”
“That's exactly what I'm saying,” Clyburn said.
When asked whether he would do the same for a Republican-friendly bank, the congressman said, “Well, Neil, let's look at how we got here. How we got here is because this same bank lobbied very -- almost viciously to get the law that they got -- we protected the banks.”
Clyburn denied that they were rewarded for pushing that.
“No. They got what they asked for. They asked to be relieved from what Democrats did. Dodd-Frank. Two Democrats put in place stress tests and other things to protect depositors from the key banks from meeting this fate that this bank just met. They lobbied to remove themselves from Dodd Franks. This is what they got,” he said.
When asked whether this sets “a dangerous precedent,” Clyburn said, “I don’t think it's dangerous. When you are protecting depositors, I don't get worried about that. I get a little bit worried when the depositors lose all of their money, and the bank executives and board members and the investors get made whole.”