Unlimited Insurance of Deposits, Crypto Included, Is Illegal
March 13, 2023, 2022 (EIRNS)—As in wars, so in financial and currency matters: Congressional authority and statutes are ignored by U.S. executive actions.
There is no basis in the Federal Deposit Insurance Act, as amended up to Feb. 9, 2023, for this action announced by the Federal Reserve, Treasury and FDIC on March 12:
“After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors. Depositors will have access to all of their money starting Monday, March 13.... We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. All depositors of this institution will be made whole.”
Section 11 of the Federal Deposit Insurance Act includes the following: “The net amount due to any depositor at an insured depository institution shall not exceed the standard maximum deposit insurance amount as determined in accordance with subparagraphs (C), (D), (E) and (F)....” Those paragraphs specify $250,000 as that maximum, with minor additions only possible as inflation adjustments, and for retirement accounts. “Systemic risk exceptions” do not exist in this Act.
In effect, the Biden Administration is trying to bail out, not only the banking system, but the swooning “tech” sector served by Silicon Valley Bank, and the cryptocurrency scams serviced by Signature Bank. (Various cryptocurrencies spiked by 10-15% on markets Monday.)