America&#8217;s gross national debt surpassed $33 trillion for the first time in U.S. history on Monday as Washington, D.C., faces a potential government shutdown over federal spending.
Data reportedly published by the Treasury Department showed the national debt — which measures how much the federal government owes security holders — hit $33.04 trillion, just months after it eclipsed $32 trillion in mid-June.
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said in a <a href="https://www.crfb.org/press-releases/national-debt-reaches-33-trillion-adds-1-trillion-debt-3-months" target="_blank" rel="noopener">news release</a> that the latest numbers reached &#8220;a new milestone that no one will be proud of.&#8221;
&#8220;Debt held by the public, meanwhile, recently surpassed $26 trillion,&#8221; MacGuineas said. &#8220;We are becoming numb to these huge numbers, but it doesn&#8217;t make them any less dangerous.&#8221;
The Congressional Budget Office confirmed last week that the underlying deficit would likely double from last fiscal year to this one, according to MacGuineas. The office reportedly <a href="https://fortune.com/2023/09/18/janet-yellen-national-debt/" target="_blank" rel="noopener">warned</a> in June that high interest rates and rising national debt could make net interest payments spike to 6.7% of GDP by 2053, according to Fortune.
&#8220;Instead of hearing about solutions, we hear promises of which programs our leaders are unwilling to touch and which taxes they are unwilling to raise,&#8221; she said. &#8220;That kind of talk is not only pandering, but it&#8217;s also downright irresponsible when we have a mess like this on our hands.&#8221;
The announcement comes as House Republicans proposed a short-term plan on Sunday that would temporarily fund the government through October 31 to avoid a shutdown and impose an 8% spending cut on federal agencies, excluding defense funding, veterans affairs, and disaster relief, <a href="https://www.foxbusiness.com/economy/us-national-debt-hits-33t-first-time-history" target="_blank" rel="noopener">according</a> to Fox Business.
But the measure received opposition from fellow GOP lawmakers while Democrats are unlikely to support it.
Michael A. Peterson, the chief executive of the budget watchdog group Peter G. Peterson Foundation, raised the alarm of a looming federal crisis.
&#8220;As we have seen with recent growth in inflation and interest rates, the cost of debt can mount suddenly and rapidly,&#8221; Peterson said, <a href="https://www.nytimes.com/2023/09/18/us/politics/us-national-debt.html" target="_blank" rel="noopener">according</a> to The New York Times. &#8220;With more than $10 trillion of interest costs over the next decade, this compounding fiscal cycle will only continue to do damage to our kids and grandkids.&#8221;
Mark Spitznagel, founder of the hedge fund Universa Investments, told Fortune in August that we&#8217;re living through the &#8220;greatest credit bubble in human history&#8221; after warning of a potential impact from the debt increase.
&#8220;We&#8217;ve never seen anything like this level of total debt and leverage in the system,&#8221; Spitznagel said. &#8220;It&#8217;s an experiment. But we know that credit bubbles have to pop. We don&#8217;t know when, but we know they have to.&#8221;
U.S. Treasury Secretary Janet Yellen <a href="https://www.cnbc.com/2023/09/18/first-on-cnbc-cnbc-transcript-united-states-treasury-secretary-janet-yellen-speaks-with-cnbcs-sara-eisen-on-squawk-on-the-street-today.html" target="_blank" rel="noopener">told</a> CNBC on Monday that she isn&#8217;t worried about the staggering debt, claiming that the net interest as a share of GDP remains under control by the federal government.
&#8220;And even with the rise we have seen in interest rates, that remains at a very reasonable level,&#8221; Yellen said, admitting that U.S. officials need to be careful about spending going forward in order to stay on this &#8220;sustainable course.&#8221;
&#8220;Certainly, greater deficit reduction is possible,&#8221; she added. &#8220;The President has proposed a series of measures that would reduce our deficits over time while investing in the economy, and this is something we need to do going forward.&#8221;
President Joe Biden <a href="https://www.dailywire.com/news/biden-signs-bill-to-increase-debt-ceiling-avoid-federal-default" target="_blank" rel="noopener">signed</a> the Fiscal Responsibility Act in June that will suspend the debt limit until January 2025 and implement restraints on spending that the Congressional Budget Office estimated would reduce budget deficits by $1.5 trillion over the next decade.

US-POLITICS-ECONOMY-DEBT

US National Debt Surpasses $33T For First Time In History

Biden Administration

Janet Yellen

National Debt

Treasury Department

Washington D.C.

Treasury Secretary <a href="https://www.dailywire.com/topic/janet-yellen">Janet Yellen</a> is facing criticism for bowing repeatedly to a <a href="https://www.dailywire.com/topic/china">Chinese</a> official during a visit to Beijing on Saturday.
Video <a href="https://www.youtube.com/watch?v=20d4DtvIMtk">published by Reuters</a> shows Yellen smiling and while giving a slight bow three times as she shook hands with Chinese Vice Premier He Lifeng, who did not bow during the seconds-long clip.
“Never, ever, ever,” Bradley Blakeman, a top White House aide to President George W. Bush, <a href="https://nypost.com/2023/07/08/us-treasury-secretary-janet-yellen-commits-embarrassing-bow-during-beijing-visit/?utm_source=twitter&amp;utm_medium=social&amp;utm_campaign=nypost">told The New York Post</a> in response to the exchange. “An American official does not bow. It looks like she’s been summoned to the principal’s office, and that’s exactly the optics the Chinese love.”
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">
Treasury Secretary Janet Yellen greets Chinese Vice Premier He Lifeng in Beijing earlier today <a href="https://t.co/iYcA7Jmuz6">pic.twitter.com/iYcA7Jmuz6</a>
&mdash; RNC Research (@RNCResearch) <a href="https://twitter.com/RNCResearch/status/1677812728277204992?ref_src=twsrc%5Etfw">July 8, 2023</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
The publication also reported Jerome Cohen, an emeritus professor at New York University and expert in Chinese law and government, said, “Bowing is not part of the accepted protocol.&#8221;
While some argued the display was not a big deal, others reacted with disgust on social media as the video of Yellen bowing was shared by various accounts, including one for the Republican National Committee.
&#8220;I can’t stand this woman,&#8221; <a href="https://twitter.com/MarinaMedvin/status/1677848685386821635">tweeted</a> defense attorney Marina Melvin. &#8220;BTW she’s bowing to him because she genuinely wants to. It’s natural for her. She’s an obsequious commie lover.&#8221;
Grabien founder Tom Elliott <a href="https://twitter.com/tomselliott/status/1677835387559895040">said</a>, &#8220;Her bowing is an embarrassment to every non-communist American.&#8221;
&#8220;How many times does she think she has to bow?&#8221; <a href="https://twitter.com/mirandadevine/status/1677834119462416385">asked</a> New York Post columnist Miranda Devine, who added a &#8220;grimacing face&#8221; emoji.
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">
How many times does she think she has to bow? 😬 <a href="https://t.co/NAvHnLRjCf">https://t.co/NAvHnLRjCf</a>
&mdash; Miranda Devine (@mirandadevine) <a href="https://twitter.com/mirandadevine/status/1677834119462416385?ref_src=twsrc%5Etfw">July 9, 2023</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
Yellen had an introductory meeting with He to &#8220;build on&#8221; U.S. President Joe Biden and Chinese leader Xi Jinping&#8217;s &#8220;guidance to deepen engagement between key senior officials on macroeconomic issues,&#8221; <a href="https://home.treasury.gov/news/press-releases/jy1601">said</a> a readout from the Treasury Department.
&#8220;The meeting was candid, constructive, and comprehensive,&#8221; the readout added. &#8220;While raising issues of concern, Secretary Yellen discussed the Administration’s approach to seek healthy economic competition with China, with a level playing field for American workers and businesses. They also exchanged views on global and domestic macroeconomic outlooks.&#8221;
The readout continued, &#8220;Secretary Yellen also conveyed that even when the United States and China have disagreements, it is vital that the two countries find ways to work together on issues of shared – and global – concern, including debt distress in low-income and emerging economies and climate finance.&#8221;
<a href="https://www.washingtonpost.com/business/2023/07/08/yellen-beijing-meeting-he-lifeng/">According to The Washington Post</a>, Yellen flubbed He&#8217;s name, calling him &#8220;Vice Premier Hu,&#8221; as they spoke about shoring up ties between their respective nations during a <a href="https://www.dailywire.com/news/u-s-cheers-candid-talks-with-china-after-months-of-rising-tensions">time of rising tensions</a>.

US Treasury Secretary Janet Yellen Visits Beijing

Treasury Secretary Ripped For Bowing To Chinese Official

China

U.S.

<a href="https://www.dailywire.com/topic/treasury-department" target="_blank" rel="noopener">Treasury</a> Secretary <a href="http://dailywire.com/topic/janet-yellen" target="_blank" rel="noopener">Janet Yellen</a> warned <a href="http://dailywire.com/topic/congress" target="_blank" rel="noopener">congressional</a> leadership on Monday that the federal government could face a <a href="http://dailywire.com/topic/national-debt" target="_blank" rel="noopener">debt</a> default in less than three weeks if an agreement on the <a href="http://dailywire.com/topic/debt-ceiling" target="_blank" rel="noopener">debt ceiling</a> is not quickly reached with President <a href="http://dailywire.com/topic/biden-administration" target="_blank" rel="noopener">Joe Biden</a>.
The debt ceiling, a policy that prevents the federal government from spending beyond a predetermined national debt limit of $31.4 trillion, surpassed the threshold earlier this year. Yellen said in her <a href="https://home.treasury.gov/news/press-releases/jy1483" target="_blank" rel="noopener">letter</a> to lawmakers that the Treasury Department expects to default on obligations as early as June 1 unless the debt limit is either suspended or increased.
“We have learned from past debt limit impasses that waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States,” she wrote. “In fact, we have already seen Treasury’s borrowing costs increase substantially for securities maturing in early June.”
Yellen added that the exact date of the debt default is “impossible to predict,” although the June 1 estimate is based on federal receipt, outlay, and debt data.
“If Congress fails to increase the debt limit, it would cause severe hardship to American families, harm our global leadership position, and raise questions about our ability to defend our national security interests,” she continued. “I continue to urge Congress to protect the full faith and credit of the United States by acting as soon as possible.”
The letter from Yellen, which is one of several similar alerts she has issued regarding the consequences of a debt default, comes days after the Congressional Budget Office warned in a <a href="https://www.cbo.gov/publication/59160" target="_blank" rel="noopener">report</a> that the “extent to which the Treasury will be able to fund the government’s ongoing operations will remain uncertain throughout May.” The document added that the “extraordinary measures” officials have used to fund operations could expire “at some point in the first two weeks of June.”
House Speaker Kevin McCarthy (R-CA), House Minority Leader Hakeem Jeffries (D-NY), Senate Majority Leader Chuck Schumer (D-NY), and Senate Minority Leader Mitch McConnell (R-KY), the leaders to whom Yellen addressed her letter, have negotiated in recent days with officials from the Biden administration about possible mechanisms to amend the debt limit. Disagreements center on whether the move will occur with spending reforms and budget cuts.
Members of the House Freedom Caucus, a bloc of conservatives without which McCarthy is unable to pass legislation due to the narrow Republican majority in the House, have <a href="https://www.dailywire.com/news/house-freedom-caucus-chairman-responds-as-white-house-lobs-spurious-claims-at-spending-cut-proposal" target="_blank" rel="noopener">said</a> they would vote to raise the debt ceiling in exchange for a framework that returns expenditures to fiscal year 2022 levels, increase the debt limit only for the next year, and cap annual spending growth at 1% over the next decade. The budget <a href="https://www.dailywire.com/news/kevin-mccarthy-unveils-plan-to-responsibly-raise-debt-limit" target="_blank" rel="noopener">proposal</a> unveiled by McCarthy mirrored the framework and successfully <a href="https://www.dailywire.com/news/gop-led-house-passes-mccarthys-plan-to-raise-debt-limit" target="_blank" rel="noopener">passed</a> through the House last month alongside a one-year increase in the debt ceiling.
Biden is slated to meet with Democratic and Republican leaders for a second time on Tuesday. “I really think there’s a desire on their part, as well as ours, to reach an agreement, and I think we’ll be able to do it,” the commander-in-chief <a href="https://www.whitehouse.gov/briefing-room/speeches-remarks/2023/05/14/remarks-by-president-biden-in-press-gaggle-12/" target="_blank" rel="noopener">told</a> reporters over the weekend. McCarthy, on the other hand, <a href="https://www.nbcnews.com/politics/white-house/treasury-says-us-risks-breaching-debt-ceiling-june-1-rcna84523" target="_blank" rel="noopener">told</a> reporters that the two sides are still “far apart” and contended that the administration is “not talking anything serious.”
A default would likely cause a recession as the federal government, a major borrower of funds that investors across the world broadly consider to be stable, neglects to repay obligations. The national debt, which now surpasses $31.7 trillion, is meanwhile a source of persistent financial risk and a damper on long-term economic growth.

Yellen Says Nation Could Face Debt Default In Less Than Three Weeks

Yellen Says Nation Could Face Default In Less Than Three Weeks

Congress

Debt Ceiling

A leading <a href="https://www.dailywire.com/topic/treasury-department" target="_blank" rel="noopener">Treasury Department</a> official refuses to admit President <a href="https://www.dailywire.com/topic/joe-biden" target="_blank" rel="noopener">Joe Biden</a> waited until the threat of a historic default became imminent to negotiate the <a href="https://www.dailywire.com/topic/debt-ceiling" target="_blank" rel="noopener">debt ceiling</a>.
<a href="https://www.dailywire.com/topic/cnn" target="_blank" rel="noopener">CNN</a> anchor Dan Bash pressed Treasury Deputy Secretary Wally Adeyemo about the issue on Sunday, weeks ahead of what could be an unprecedented government default.
&#8220;If the threat from default is so dire, why did the president wait until this month to have real negotiations about how to and where to have spending cuts in order to avert default?&#8221; Bash asked.
Adeyemo dismissed the premise of the question.
He argued that Biden &#8220;didn&#8217;t wait&#8221; because he <a href="https://www.whitehouse.gov/omb/budget/" target="_blank" rel="noopener">proposed a budget</a> in March to reduce the debt by nearly $3 trillion over the next decade. Republicans passed their own plan in the following month, Adeyemo noted, and Biden then invited congressional leaders to discuss &#8220;fiscal policy.&#8221;
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">
&quot;If the threat from default is so dire, why did the president wait until this month to have real negotiations?&quot;
Deputy Treasury Secretary Wally Adeyemo: &quot;The president didn&#39;t wait&quot; 🤔 <a href="https://t.co/yC61sIUtPt">pic.twitter.com/yC61sIUtPt</a>
&mdash; RNC Research (@RNCResearch) <a href="https://twitter.com/RNCResearch/status/1657748223593701377?ref_src=twsrc%5Etfw">May 14, 2023</a></blockquote>
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Congressional leaders met with Biden at the White House last week but failed to come up with an agreement. A planned second meeting on Friday was <a href="https://www.nbcnews.com/politics/congress/debt-ceiling-meeting-congressional-leaders-biden-delayed-rcna84020" target="_blank" rel="noopener">postponed</a>, but Adeyemo contended the conversations were &#8220;constructive&#8221; and stated that Biden has &#8220;made clear&#8221; he does not think <a href="https://www.dailywire.com/news/debt-ceiling-battle-lines-drawn-ahead-of-white-house-meeting" target="_blank" rel="noopener">invoking the 14th Amendment</a> to get around Congress would &#8220;solve our problems now.&#8221;
Biden and Democrats in Congress are advocating for a “clean” bill to raise the debt ceiling above the current limit of roughly $31.4 trillion, a stance which set them up for a clash with Republicans who want to discuss concessions on spending cuts after the GOP-led House passed their proposal in April.
&#8220;It&#8217;s clear that the only responsible way to raise the debt ceiling is to limit reckless spending and get inflation under control,&#8221; House Speaker Kevin McCarthy (R-CA) <a href="https://twitter.com/SpeakerMcCarthy/status/1657086310618902529" target="_blank" rel="noopener">tweeted</a> on Friday.
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As talks continue, &#8220;There is no reason we shouldn&#8217;t raise the debt limit and prevent default in this country, a default that could lead to a massive recession that would cost us millions of jobs,&#8221; Adeyemo said.
Time is running short as the Congressional Budget Office <a href="https://www.cbo.gov/publication/59160" target="_blank" rel="noopener">warned there is &#8220;significant risk&#8221;</a> that the government would no longer be able to pay all of its debts at some point during the first two weeks of June if the debt limit remains unchanged despite “<a href="https://www.dailywire.com/news/yellen-warns-congress-extraordinary-measures-have-begun-after-debt-ceiling-breached" target="_blank" rel="noopener">extraordinary measures</a>” being taken by the Treasury Department.
&#8220;The president&#8217;s view is that we should be able to raise the debt limit and also be able to get a deal with regard to fiscal policy,&#8221; Adeyemo said on Sunday, sticking with the view that avoiding a default should be handled as a stand-alone issue.

Wally Adeyemo, deputy US Treasury secretary,

Treasury Official Insists Biden ‘Didn’t Wait’ To Negotiate As Debt Default Nears

Treasury Official Insists Biden 'Didn't Wait' To Negotiate As Debt Default Nears

Economy

Executive

Joe Biden

Politics

The <a href="https://www.dailywire.com/topic/congressional-budget-office-cbo" target="_blank" rel="noopener">Congressional Budget Office</a> warned on Friday that there exists considerable “uncertainty” with respect to government <a href="https://www.dailywire.com/topic/budget" target="_blank" rel="noopener">funds</a> over the next several weeks as congressional leaders negotiate over a potential <a href="https://www.dailywire.com/topic/debt-ceiling" target="_blank" rel="noopener">debt ceiling</a> increase with the <a href="http://dailywire.com/topic/biden-administration" target="_blank" rel="noopener">White House</a>.
The debt ceiling, a policy established by <a href="http://dailywire.com/topic/congress" target="_blank" rel="noopener">Congress</a> that prevents the federal government from spending beyond a predetermined national debt limit of $31.4 trillion, surpassed the threshold earlier this year. Treasury Secretary Janet Yellen <a href="https://www.dailywire.com/news/yellen-warns-of-debt-default-as-early-as-june-1" target="_blank" rel="noopener">warned</a> last week that the nation could face a default as soon as June 1 unless the debt limit is suspended or increased.
The Congressional Budget Office, a nonpartisan agency which provides lawmakers with budgetary and economic analysis, cautioned in a <a href="https://www.cbo.gov/publication/59160" target="_blank" rel="noopener">report</a> that the “extent to which the Treasury will be able to fund the government’s ongoing operations will remain uncertain throughout May.” The document added that the “extraordinary measures” officials have used to fund operations for the past several weeks could expire “at some point in the first two weeks of June.”
“If the debt limit is not raised or suspended before the Treasury’s cash and extraordinary measures are exhausted, the government will have to delay making payments for some activities, default on its debt obligations, or both,” the report commented.
Should remaining cash and extraordinary measures last until June 15, on the other hand, the government may be able to fund operations “through at least the end of July” as consumers and businesses pay expected quarterly taxes. “Certain large flows of cash into and out of the Treasury follow a regular schedule that directly affects the amount of debt subject to limit,” the agency added.
Treasury officials can, among other “extraordinary measures,” continue to pause investments into the Thrift Savings Plan and continue to suspend the issuance of new securities for the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund.
Continued disagreement about an amendment to the debt limit between Democrats and Republicans centers on whether the move will occur alongside broader spending reforms. President Joe Biden <a href="https://www.dailywire.com/news/republicans-have-done-our-part-mccarthy-blasts-biden-after-first-debt-ceiling-negotiation-in-months" target="_blank" rel="noopener">discussed</a> mechanisms to increase the debt limit this week with House Speaker Kevin McCarthy (R-CA), House Minority Leader Hakeem Jeffries (D-NY), Senate Majority Leader Chuck Schumer (D-NY), and Senate Minority Leader Mitch McConnell (R-KY).
Biden, who has contended that Republicans are risking economic calamity by asking for spending reforms, said in <a href="https://www.whitehouse.gov/briefing-room/speeches-remarks/2023/05/09/remarks-by-president-biden-on-debt-ceiling-negotiations/" target="_blank" rel="noopener">remarks</a> that he found the meeting to be “productive,” while McCarthy, who noted that Democrats waited more than three months to resume negotiations launched earlier this year, <a href="https://www.speaker.gov/speaker-mccarthys-response-after-white-house-meeting/" target="_blank" rel="noopener">commented</a> that he “did not find progress” in the discussions.
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“The only thing we’re asking is that next year we spend the same amount of money we spent five months ago,” McCarthy said after the meeting, noting that the debt limit talks were the first time all four congressional leaders have met with Biden since the new Congress started earlier this year. “Unfortunately in this meeting I heard nothing new.”
A default would indeed cause a recession should the federal government, a major borrower of funds that investors broadly consider stable, neglect to repay obligations. The national debt, which surpassed the $31.4 trillion debt limit this year to reach $31.7 trillion, is meanwhile a source of persistent financial risk and a damper on economic growth.

Extent To Which Government Can Be Funded Without Debt Ceiling Is ‘Uncertain,’ Agency Warns

Government Funding For The Next Several Weeks Is ‘Uncertain,' Agency Warns

Congressional Budget Office (CBO)

Sen. <a href="http://dailywire.com/topic/joe-manchin?_gl=1*m94erc*_ga*NzUzNDA5ODIxLjE2NzkzMjkzNzM.*_ga_CZKR9ZYKJP*MTY4Mzg5NjkxNC4yMTQuMS4xNjgzODk3Njg5LjU5LjAuMA.." target="_blank" rel="noopener">Joe Manchin</a> (D-WV) contended alongside more than three dozen Republican colleagues that the <a href="https://www.dailywire.com/topic/treasury-department" target="_blank" rel="noopener">Treasury Department</a> is pressuring state insurance regulators to consider factors linked to the environmental, social, and corporate governance movement, also known as <a href="http://dailywire.com/topic/esg" target="_blank" rel="noopener">ESG</a>.
A <a href="https://www.manchin.senate.gov/newsroom/press-releases/manchin-leads-effort-to-block-esg-agenda-in-state-regulated-insurance" target="_blank" rel="noopener">letter</a> from members of the <a href="https://www.dailywire.com/topic/u-s-senate" target="_blank" rel="noopener">Senate</a> asserted last week that the Federal Insurance Office, which was <a href="https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/federal-insurance-office" target="_blank" rel="noopener">created</a> to “monitor all aspects of the insurance sector,” has improperly sought to influence state-level authorities and insurance firms to consider climate risk. The entity sought public input on “how climate change could affect the insurance market” in August 2021 and proposed an “unworkable data collection effort” in order to determine which “insurance coverage areas are most susceptible to climate-related risks” in October 2022.
“Though the FIO’s actions to date do not enact formal rules or regulations, they do place pressure on state insurance regulators and insurers themselves,” the letter addressed to Treasury Secretary Janet Yellen said. “We are concerned that this may ultimately result in state insurance regulators and insurers feeling coerced into adopting one-size-fits-all climate-risk mitigation policies rather than building on existing efforts to mitigate risks and manage policyholders’ exposure to changing weather patterns as deemed appropriate by the insurers and state insurance regulators on the ground, which has served the industry and public well.”
The data collection effort from the Federal Insurance Office would assemble information about property and casualty insurance risks purportedly stemming from climate change in various locales across the nation. Yellen <a href="https://home.treasury.gov/news/press-releases/jy1030" target="_blank" rel="noopener">commented</a> last year that the impact of Hurricane Ian in Florida demonstrates how “Americans are being affected by the increasing costs of climate change.”
The letter added that the actions could violate more than a century of precedent in which insurance is regulated by individual states rather than the federal government.
“The Biden administration is ignoring steps insurers and state insurance regulators are already taking and instead utilizing the FIO to continue pushing ESG policies as part of its unrealistic environmental agenda,” continued the letter, which was likewise signed by lawmakers such as Sen. John Thune (R-SD), Sen. Tim Scott (R-SC), and Sen. John Barrasso (R-WY).
Authors of the letter also cited a recent <a href="https://www.dailywire.com/news/bidens-woke-investment-rule-stays-intact-as-house-fails-to-override-veto" target="_blank" rel="noopener">veto</a> from President Joe Biden that overturned a resolution to end a Labor Department rule which permits retirement fiduciaries to consider climate change and other ESG factors “when they make investment decisions and when they exercise shareholder rights, including voting on shareholder resolutions and board nominations.” Manchin, who faces re-election next year in a broadly conservative state, was one of only three Democrats in Congress to support the resolution, which would have preserved prior rules that required fiduciaries to “base investment decisions on financial factors” alone.
Skeptics of the ESG movement contend that the philosophy intermixes political causes, such as decreasing carbon emissions, in a manner that compromises or distracts from profitability. “The administration’s unrelenting campaign to advance a radical social and environmental agenda is only exacerbating these challenges,” Manchin said in a <a href="https://www.dailywire.com/news/absolutely-infuriating-manchin-blasts-biden-for-vetoing-rebuke-of-esg" target="_blank" rel="noopener">statement</a> after the veto.
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Endorsements of the ESG movement from the White House also correspond with attempts to more strictly regulate appliances such as gas stoves and dishwashers, as well as crack down on emissions at power plants fueled by coal and natural gas. Manchin threatened this week to <a href="https://www.dailywire.com/news/manchin-shreds-biden-over-expected-crackdown-on-power-plants-reveals-how-he-will-respond" target="_blank" rel="noopener">oppose</a> every nominee sent to the Environmental Protection Agency until the power plant rules are reversed.

Joe Manchin

Manchin Joins 37 Republicans To Oppose Another Biden ESG Move

Climate Change

<a href="https://www.dailywire.com/topic/treasury-department" target="_blank" rel="noopener">Treasury</a> Secretary <a href="https://www.dailywire.com/topic/janet-yellen" target="_blank" rel="noopener">Janet Yellen</a> contacted multiple prominent American <a href="http://dailywire.com/topic/business" target="_blank" rel="noopener">business</a> leaders on Monday to detail the financial <a href="http://dailywire.com/topic/economy" target="_blank" rel="noopener">risk</a> stemming from the current <a href="http://dailywire.com/topic/debt-ceiling" target="_blank" rel="noopener">debt ceiling</a> controversy.
The debt ceiling, a policy established by <a href="http://dailywire.com/topic/congress" target="_blank" rel="noopener">Congress</a> that prevents the federal government from spending beyond a predetermined national debt limit of $31.4 trillion, surpassed the threshold earlier this year. Yellen <a href="https://www.dailywire.com/news/yellen-warns-of-debt-default-as-early-as-june-1" target="_blank" rel="noopener">warned</a> last week that the nation could face a default as soon as the first day of June unless the debt limit is suspended or increased.
The veteran economist held multiple one-on-one conversations with individual executives about the &#8220;dangerous consequences of the current brinkmanship&#8221; in recent days, one of two unnamed sources familiar with the matter said in a <a href="https://www.reuters.com/business/yellen-is-calling-ceos-personally-warn-us-debt-ceiling-sources-2023-05-08/?taid=64598be5454148000194d30c&amp;utm_campaign=trueAnthem:+Trending+Content&amp;utm_medium=trueAnthem&amp;utm_source=twitter" target="_blank" rel="noopener">report</a> from Reuters. The sources declined to name the executives with whom Yellen discussed the phenomenon.
Biden administration officials have repeatedly asserted that Republican lawmakers are risking a worldwide recession by insisting that any amendment to the debt ceiling should be accompanied by meaningful spending cuts or limits upon future expenditures. Yellen said in an <a href="https://www.dailywire.com/news/janet-yellen-suggests-republicans-are-holding-a-gun-to-the-head-of-the-american-people-over-debt-ceiling" target="_blank" rel="noopener">interview</a> on Sunday that Republicans are thereby holding a “gun to the head of the American people,” contending that the effort to achieve “agreement on budget priorities” before increasing the debt limit “simply is unacceptable” due to the recession risks.
House Speaker Kevin McCarthy (R-CA) and President Joe Biden <a href="https://www.dailywire.com/news/white-house-takes-adversarial-posture-toward-mccarthy-ahead-of-budget-cut-meeting-heres-what-they-want-him-to-do" target="_blank" rel="noopener">met</a> in early February to discuss possible mechanisms to raise or eliminate the debt limit while reconsidering budget priorities, but the commander-in-chief delayed further meetings for several months. The two officials are scheduled to meet for the second time alongside other lawmakers on Tuesday.
White House Press Secretary Karine Jean-Pierre said in a Monday <a href="https://www.whitehouse.gov/briefing-room/press-briefings/2023/05/08/press-briefing-by-press-secretary-karine-jean-pierre-32/" target="_blank" rel="noopener">briefing</a> that Biden would attempt to create separate negotiations processes for budget cuts and the debt ceiling. “Remember, that’s regular order,” she told reporters. “That is the way that we’re supposed to be doing this: having a negotiation on budget, not connecting it to the debt ceiling.”
Members of the House Freedom Caucus, a bloc of conservative Republicans, have <a href="https://www.dailywire.com/news/house-freedom-caucus-chairman-responds-as-white-house-lobs-spurious-claims-at-spending-cut-proposal" target="_blank" rel="noopener">said</a> they would consider voting to raise the debt ceiling in exchange for a framework that returns expenditures to fiscal year 2022 levels, raises the debt ceiling only for the next year, and limits annual spending growth to 1% over the next decade. McCarthy unveiled a budget <a href="https://www.dailywire.com/news/kevin-mccarthy-unveils-plan-to-responsibly-raise-debt-limit" target="_blank" rel="noopener">proposal</a> that mirrored the framework and <a href="https://www.dailywire.com/news/gop-led-house-passes-mccarthys-plan-to-raise-debt-limit" target="_blank" rel="noopener">passed</a> the measure through the House two weeks ago. The narrowly Republican majority requires votes from the House Freedom Caucus to pass bills.
Jean-Pierre said last week that “the only practical path to avoid default is for Congress to suspend the debt limit without conditions” because of the “limited time” before the potential default. House Freedom Caucus Chairman Scott Perry (R-PA) previously <a href="https://www.dailywire.com/news/freedom-caucus-chair-blasts-white-house-for-punting-debt-ceiling-talks-for-months-then-saying-there-is-limited-time-to-negotiate" target="_blank" rel="noopener">told</a> The Daily Wire that the remarks were “like a pyromaniac starting a fire and watching it burn for months suddenly declaring it needs to be put out while simultaneously pouring more gas on it.”
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Forty-three Republican members of the Senate recently <a href="https://www.dailywire.com/news/debt-ceiling-battle-lines-drawn-ahead-of-white-house-meeting" target="_blank" rel="noopener">endorsed</a> a letter declaring that they would oppose a “clean” debt ceiling bill separate from any spending cuts or other policy concessions. Meanwhile, Senate Majority Leader Chuck Schumer (D-NY) announced that the upper chamber would hold hearings on the bill to “expose the true impact of this reckless legislation on everyday Americans.”

Treasury Secretary Janet Yellen Testifies To Senate Committee On President Biden’s FY2024 Budget

Janet Yellen Warns CEOs About Recession Risks From Debt Ceiling Battle: Report

Janet Yellen Warns CEOs About Risks From Debt Limit Battle

The United States risks defaulting on its debt as early as June 1, Treasury Secretary <a href="https://www.dailywire.com/topic/janet-yellen" target="_blank" rel="noopener">Janet Yellen</a> announced on Monday.
The one-month estimate appeared <a href="https://home.treasury.gov/news/press-releases/jy1454" target="_blank" rel="noopener">in a letter sent to leaders in Congress</a>, where Republicans and Democrats have been engaged in political fighting over raising the debt ceiling.
&#8220;In my January 13 letter, I noted that it was unlikely that cash and extraordinary measures would be exhausted before early June. After reviewing recent federal tax receipts, our best estimate is that we will be unable to continue to satisfy all of the government’s obligations by early June, and potentially as early as June 1, if Congress does not raise or suspend the debt limit before that time,&#8221; Yellen said.
&#8220;This estimate is based on currently available data, as federal receipts and outlays are inherently variable, and the actual date that Treasury exhausts extraordinary measures could be a number of weeks later than these estimates,&#8221; Yellen added.
Yellen notified Congress in January that the United States had hit the statutory limit of roughly $31.4 trillion and advised that her agency take “<a href="https://www.dailywire.com/news/yellen-warns-congress-extraordinary-measures-have-begun-after-debt-ceiling-breached" target="_blank" rel="noopener">extraordinary measures</a>” so the government could continue to pay its bills, but only in the short term.
Since that time, experts have <a href="https://thehill.com/business/3869077-us-could-default-on-debt-as-soon-as-june-analysis/" target="_blank" rel="noopener">warned of a default</a> this summer that could <a href="https://www.nytimes.com/2023/03/07/us/politics/debt-default-economy.html" target="_blank" rel="noopener">cripple the U.S. economy</a> without a deal to raise the borrowing limit for the federal government, which the Treasury Department <a href="https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/debt-limit" target="_blank" rel="noopener">says Congress has acted upon 78 times since 1960</a>.
On Wednesday, the GOP-led House narrowly <a href="https://www.dailywire.com/news/gop-led-house-passes-mccarthys-plan-to-raise-debt-limit" target="_blank" rel="noopener">passed</a> a bill called the &#8220;Limit, Save, Grow Act of 2023,&#8221; which would <a href="https://www.dailywire.com/news/four-gop-holdouts-explain-why-they-voted-against-mccarthy-championed-debt-ceiling-bill">suspend the debt ceiling</a> through March 31, 2024, or until an increase in debt of $1.5 trillion — whichever comes first — in exchange for a host of spending cuts. The Congressional Budget Office <a href="https://thehill.com/homenews/house/3971403-gop-debt-ceiling-bill-would-save-about-4-8-trillion-over-10-years-cbo-estimate/" target="_blank" rel="noopener">projected</a> the proposal would slash federal deficits by $4.8 trillion over ten years.
President Joe Biden and his fellow Democrats have insisted on a “clean” debt ceiling bill separate from any spending cuts or any policy concessions. Meanwhile, House Speaker Kevin McCarthy (R-CA) has pushed for negotiations.
Earlier on Monday, Majority Leader <a href="https://www.dailywire.com/topic/chuck-schumer" target="_blank" rel="noopener">Chuck Schumer</a> (D-NY) announced the <a href="https://www.dailywire.com/topic/u-s-senate" target="_blank" rel="noopener">Senate</a> would <a href="https://www.dailywire.com/topic/debt-ceiling" target="_blank" rel="noopener">hold hearings</a> on the bill starting on Thursday to &#8220;expose the true impact of this reckless legislation on everyday Americans.&#8221;
After Yellen released her letter, the White House announced that Biden had called congressional leaders, including McCarthy and Schumer, to invite them to a meeting at the White House on May 9.
Yellen said it is &#8220;impossible to predict with certainty the exact date when Treasury will be unable to pay the government’s bills, and I will continue to update Congress in the coming weeks as more information becomes available.&#8221;
Though Yellen said her agency is continuing to take action by suspending the issuance of State and Local Government Series Treasury securities, she warned Congress that time is of the essence.
&#8220;We have learned from past debt limit impasses that waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States,&#8221; she wrote. &#8220;If Congress fails to increase the debt limit, it would cause severe hardship to American families, harm our global leadership position, and raise questions about our ability to defend our national security interests.&#8221;
Yellen concluded: &#8220;I respectfully urge Congress to protect the full faith and credit of the United States by acting as soon as possible.&#8221;

US Treasury Secretary Janet Yellen

Yellen Warns Of Debt Default As Early As June 1

The <a href="https://www.dailywire.com/topic/department-of-justice" target="_blank" rel="noopener">Department of Justice</a> issued indictments Friday against dozens of alleged drug traffickers with ties to <a href="https://www.dailywire.com/topic/mexico" target="_blank" rel="noopener">Mexico</a>’s Sinaloa Cartel, including the three sons of former Sinaloa head Joaquín “El Chapo” Guzmán Loera.
The indictments charge 28 people with crimes ranging from drug trafficking to machine gun possession to money laundering. None of the defendants are located in the United States; 23 are based in Mexico, four are based in China, and one is based in Guatemala.
“Today, the Justice Department is announcing significant enforcement actions against the largest, most violent, and most prolific fentanyl trafficking operation in the world — run by the Sinaloa Cartel, and fueled by Chinese precursor chemical and pharmaceutical companies,” said Attorney General Merrick Garland in a <a href="https://www.justice.gov/usao-sdny/pr/us-attorney-announces-charges-against-leadership-sinaloa-cartel-and-25-other-defendants" target="_blank" rel="noopener">statement</a>. “Families and communities across our country are being devastated by the fentanyl epidemic. Today’s actions demonstrate the comprehensive approach the Justice Department is taking to disrupt fentanyl trafficking and save American lives.”
The Guzman sons are high-up leaders in the Sinaloa organization, arguably the most powerful drug cartel in Mexico. One of the men, Ovidio Guzmán, also known as “el raton,” was <a href="https://www.cnn.com/2023/01/06/americas/el-chapo-son-arrest-mexico-prison-intl/index.html" target="_blank" rel="noopener">arrested</a> by Mexican authorities in January during an assault on a Sinaloa stronghold. Twenty-nine people died in the operation.
The Department of Treasury announced sanctions targeting fentanyl trafficking as well on Friday. The department slapped sanctions on two Chinese entities and five people based in China and Guatemala with sanctions in a crackdown on fentanyl precursor manufacturing and selling.
“Illicit fentanyl is responsible for the deaths of tens of thousands of Americans each year,” Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian Nelson said in a <a href="https://home.treasury.gov/news/press-releases/jy1413#:~:text=WASHINGTON%20%E2%80%93%20Today%2C%20the%20U.S.%20Department,the%20production%20of%20illicit%20fentanyl" target="_blank" rel="noopener">statement</a>. “Treasury, as part of the whole-of-government effort to respond to this crisis, will continue to vigorously apply our tools to prevent the transfer of precursor chemicals and machinery necessary to produce this drug.”
In fiscal year 2022, Customs and Border Protection <a href="https://www.nbcnews.com/politics/national-security/fentanyl-gun-smuggling-us-mexico-border-deal-rcna75782" target="_blank" rel="noopener">confiscated</a> over 50,000 pounds of fentanyl from attempted drug traffickers and others. Drug smuggling over the border is <a href="https://www.cbsnews.com/news/fentanyl-seizures-rise-u-s-mexico-border-heres-why/" target="_blank" rel="noopener">spiking</a> amid an unprecedented wave of illegal immigration that has continued to escalate over the past two years.
Most of the fentanyl made in Mexico is manufactured from precursor chemicals shipped in from China. Chinese drug makers sell the precursors to cartels and drug labs in Mexico. The chemicals are then made into fentanyl and typically crafted into pills that resemble other, legal drugs, such as OxyContin.
The Biden administration&#8217;s crackdown on the drug trade over the U.S. southern border comes as Republicans have been calling for stiffer resistance to cartels operating south of the U.S. border. Some lawmakers have suggested the cartels be declared terrorist organizations and said they warrant a response from the U.S. military.

Joaquin “El Chapo” Guzman

DOJ Unveils Charges Against ‘El Chapo’ Sons, 25 Others In Crackdown On Fentanyl Trade

Crime

Department of Justice

Guatemala

Mexico

World

Lawmakers created the Federal Deposit Insurance Corporation, also known as the FDIC, in the first years of the Great Depression in order to prevent <a href="http://dailywire.com/topic/banks" target="_blank" rel="noopener">bank</a> runs and restore faith in the financial system. Some lawmakers are considering revisions to the present deposit insurance limit of $250,000 as the <a href="http://dailywire.com/topic/economy" target="_blank" rel="noopener">economy</a> grapples with the second-largest bank failure in American history.
<a href="http://dailywire.com/topic/silicon-valley-bank" target="_blank" rel="noopener">Silicon Valley Bank</a> provided services to half of venture-backed technology and healthcare firms in the United States; the vast majority of customers therefore maintained deposits well above the $250,000 threshold backed by the FDIC, since businesses generally require larger sums of liquid assets to conduct operations and compensate employees.
When the FDIC was forced to take over the company on March 10, however, officials guaranteed deposits both above and below the $250,000 threshold in order to prevent bank runs at other financial institutions. Signature Bank, another company with a substantial majority of large depositors, collapsed on March 12 and was likewise taken over by the FDIC.
Sen. Elizabeth Warren (D-MA) and Rep. Maxine Waters (D-CA) have each <a href="https://www.dailywire.com/news/top-democrats-say-fdic-should-reexamine-250000-deposit-insurance-threshold" target="_blank" rel="noopener">suggested</a> in recent days that the $250,000 limit should be reexamined. Lawmakers have indeed raised the deposit insurance threshold over the years: the FDIC only offered $2,500 of deposit insurance in 1934, a threshold which gradually increased to $100,000 in 1980 before reaching $250,000 with the financial reforms that occurred amid the Great Recession in 2008. The FDIC funds deposit insurance through fees on covered banks rather than taxpayer dollars.
Treasury Secretary Janet Yellen has <a href="https://www.dailywire.com/news/yellen-walks-back-implicit-support-for-large-bank-account-holders-prompts-investor-unease" target="_blank" rel="noopener">sent</a> mixed signals about whether officials would continue to support both insured and uninsured deposits, prompting unease among some investors.
David Bahnsen, the founder of Manhattan-based wealth management firm The Bahnsen Group, told The Daily Wire that he expects authorities to maintain assumptions that there is an “implicit” unlimited amount of FDIC coverage available while leaving the codified $250,000 threshold intact. Such an approach, however, would “improperly price risk and protection, and create a moral hazard for depositors, and indeed the broader financial system.”
He added that the creation of an explicit system centered around unlimited FDIC coverage would require congressional approval, which regulators “clearly want to avoid,” as well as increased payments from the “low-margin banking system.”
Silicon Valley Bank fulfilled withdrawal requests by selling a long-term bond portfolio that had declined in value amid Federal Reserve actions over the past year to hike interest rates, moves which followed excessive monetary stimulus in response to the lockdown-induced recession. Assets in the overall banking system are now $2 trillion lower than their book value, according to a <a href="https://www.dailywire.com/news/banking-system-is-sound-and-government-will-back-deposits-at-smaller-banks-yellen-promises" target="_blank" rel="noopener">study</a> from analysts at the National Bureau of Economic Research.
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Bahnsen noted that the fractional reserve banking system, under which financial institutions only maintain a portion of deposits immediately available since account holders generally do not need instant access to all of their funds, will always carry some degree of bank run risk. He asserted that actions from the Federal Reserve nevertheless prompted the current volatility.
“All levered finance means financial contagion risk is a very real thing when confidence falters, and faltering confidence is the ultimate self-fulfilling prophecy,” Bahnsen continued. “The two causes of the Silicon Valley Bank implosion were the Federal Reserve’s loose policy and the Federal Reserve’s tight policy. Fractional reserve banking was a problem for Silicon Valley Bank only after the Federal Reserve policies created a boom then created a bust.”

Silicon Valley Bank Collapse

As Multiple Banks Implode, Insurance Deposit Limit Receives Renewed Scrutiny 

Bank Insurance Deposit Limit Receives Renewed Scrutiny 

Banks

Silicon Valley Bank

<a href="https://www.dailywire.com/topic/treasury-department" target="_blank" rel="noopener">Treasury</a> Secretary <a href="http://dailywire.com/topic/janet-yellen?_gl=1*tcdc2g*_ga*NzUzNDA5ODIxLjE2NzkzMjkzNzM.*_ga_CZKR9ZYKJP*MTY3OTU4MTExNC4xNS4xLjE2Nzk1OTQ1NzUuNTguMC4w" target="_blank" rel="noopener">Janet Yellen</a> prompted unease among investors after she appeared to walk back comments indicating that financial authorities would guarantee large <a href="http://dailywire.com/topic/banks" target="_blank" rel="noopener">bank</a> deposits.
The recent collapse of <a href="http://dailywire.com/topic/silicon-valley-bank" target="_blank" rel="noopener">Silicon Valley Bank</a>, where the vast majority of accounts exceeded the $250,000 threshold guaranteed by the Federal Deposit Insurance Corporation, prompted the government-backed company to secure all accounts in order to prevent additional bank runs. Some investors have called for deposit insurance for all account holders across the financial system with balances above $250,000 until the crisis subsides.
Yellen vowed in <a href="https://home.treasury.gov/news/press-releases/jy1354" target="_blank" rel="noopener">remarks</a> to the American Bankers Association on Tuesday that interventions similar to the one that protected Silicon Valley Bank account holders “could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion,” a comment that market actors interpreted as an implicit guarantee of all deposits. The senior Biden administration economist <a href="https://www.youtube.com/watch?v=0_iw_Vc-T6I" target="_blank" rel="noopener">told</a> the Senate Appropriations Committee on Wednesday, however, that she has “not considered or discussed anything” related to “blanket insurance or guarantees of all deposits.”
Markets slid on Wednesday afternoon as a result of the comments; officials at the Federal Reserve also <a href="https://www.dailywire.com/news/federal-reserve-hikes-target-interest-rates-by-quarter-point-as-officials-balance-fighting-inflation-and-protecting-banks" target="_blank" rel="noopener">announced</a> an expected quarter-point target interest rate hike on Wednesday.
Pershing Square Capital Management CEO Bill Ackman had <a href="https://twitter.com/BillAckman/status/1638263984313729024" target="_blank" rel="noopener">said</a> that the earlier comments from Yellen “definitely help and hopefully mitigate the need for a temporary deposit guarantee.” He later <a href="https://twitter.com/BillAckman/status/1638659841358004225" target="_blank" rel="noopener">added</a> that the statement declaring that “systemwide deposit guarantees were not being considered” had the opposite effect.
“A temporary systemwide deposit guarantee is needed to stop the bleeding,” he contended. “The longer the uncertainty continues, the more permanent the damage is to the smaller banks, and the more difficult it will be to bring their customers back.”
Ackman noted that the rise in target interest rates to 5% renders bank deposits less attractive to savers and will prompt them to lend their money so they can benefit from the higher returns. “I would be surprised if deposit outflows don’t accelerate effective immediately,” he remarked.
Silicon Valley Bank fulfilled withdrawals by selling a long-term bond portfolio that had declined substantially in value amid Federal Reserve actions to hike interest rates. Assets in the banking system are now $2 trillion lower than their book value as a result of the rollback in monetary stimulus, which had been maintained to stimulate the economy during the lockdown-induced recession, according to a <a href="https://www.dailywire.com/news/banking-system-is-sound-and-government-will-back-deposits-at-smaller-banks-yellen-promises" target="_blank" rel="noopener">study</a> from analysts at the National Bureau of Economic Research.
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Grit Capital CEO Genevieve Roch-Decter also <a href="https://twitter.com/GRDecter/status/1638901807027044356" target="_blank" rel="noopener">noted</a> that banks increasing their exposure to the commercial real estate sector in recent years constitutes a “timebomb sitting on bank balance sheets” since projects in the industry have been harmed by remote work arrangements. “Silicon Valley Bank’s collapse was triggered by a $1.8 billion loss from its bond portfolio,” she said. “The losses from commercial real estate loans that go into default could be much, much higher.”
Confidence in the financial system has been severely impacted by the recent volatility. Only 10% of the population has a “great deal” of confidence in the individuals who lead banks, according to a <a href="https://www.dailywire.com/news/americans-faith-in-banks-plummets-amid-financial-chaos" target="_blank" rel="noopener">poll</a> from the Associated Press and the National Opinion Research Center released on Wednesday, while 30% have “hardly any” confidence and 57% have “only some” confidence. The survey, which was conducted in the days after Silicon Valley Bank collapsed, showed a decline from the 22% who had a “great deal” of confidence three years ago.

Treasury Secretary Janet Yellen Testifies In Senate Hearing On Department’s 2024 Budget Request

Yellen Walks Back Implicit Support For Large Bank Account Holders, Prompts Investor Unease

Yellen Walks Back Implicit Support For Large Bank Account Holders

<a href="https://www.dailywire.com/topic/treasury-department" target="_blank" rel="noopener">Treasury</a> Secretary <a href="http://dailywire.com/topic/janet-yellen?_gl=1*3y8f6k*_ga*NzUzNDA5ODIxLjE2NzkzMjkzNzM.*_ga_CZKR9ZYKJP*MTY3OTQwNjAxOS42LjEuMTY3OTQxMTc2Ni41Ny4wLjA." target="_blank" rel="noopener">Janet Yellen</a> commented on Tuesday that deposit withdrawals from regional <a href="http://dailywire.com/topic/banks" target="_blank" rel="noopener">banks</a> have stabilized and affirmed that authorities will protect smaller financial institutions.
The recent collapse of <a href="http://dailywire.com/topic/silicon-valley-bank" target="_blank" rel="noopener">Silicon Valley Bank</a>, where the vast majority of accounts exceeded the $250,000 threshold guaranteed by the Federal Deposit Insurance Corporation, prompted the government-backed company to secure all accounts at the firm to prevent more bank runs. Yellen said in <a href="https://home.treasury.gov/news/press-releases/jy1354" target="_blank" rel="noopener">remarks</a> at a summit of the American Bankers Association that the Biden administration and the Federal Reserve successfully mitigated fallout in the financial sector.
“As everyone in this room knows, the American economy relies on a healthy banking system that can provide for the credit needs of families and businesses,” Yellen said. “Let me be clear: the government’s recent actions have demonstrated our resolute commitment to take the necessary steps to ensure that depositors’ savings and the banking system remain safe.”
Silicon Valley Bank provided services to half of venture-backed technology and health care firms in the United States. The current deposit insurance threshold of $250,000 is suitable for most individuals and households, yet businesses such as those served by Silicon Valley Bank often retain larger sums to conduct operations and pay employees.
Yellen added that “the situation is stabilizing” and characterized the banking system as “sound.” She noted that regulators are examining the causes of the failures at Silicon Valley Bank, which covered withdrawal requests by selling a bond portfolio that had declined substantially in value amid Federal Reserve actions to hike interest rates.
One recent <a href="https://www.dailywire.com/news/nearly-200-other-banks-vulnerable-to-svb-style-collapse-study-says" target="_blank" rel="noopener">study</a> from analysts associated with the National Bureau of Economic Research revealed that monetary tightening from the Federal Reserve has caused bank asset values to decrease by 10%, indicating that the overall financial system’s assets are $2 trillion lower than their book value. The “substantial losses in the value of banks’ long-duration assets” indicate that “banks are much more fragile” to runs by uninsured depositors.
Approximately 1,619 of the 4,800 financial institutions evaluated by the researchers would not be able to withstand all uninsured account holders demanding their funds, while 186 banks would not be unable to withstand half of uninsured depositors demanding their funds. Both scenarios assume that the banks would not be forced to sell their long-term assets at fire sale prices to cover withdrawals.
Sen. James Lankford (R-OK) <a href="https://www.dailywire.com/news/janet-yellen-admits-community-banks-in-middle-america-might-not-be-protected-like-silicon-valley-bank" target="_blank" rel="noopener">questioned</a> Yellen last week about whether uninsured deposits at community banks in his state “regardless of their size” would likewise be “fully insured.” She initially responded that authorities would collectively decide whether failure of the institutions would “create systemic risk and significant financial and economic consequences” but vowed at the American Bankers Association that smaller banks would receive protection.
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“Given recent developments, I think it is important to reaffirm a broader point: our dynamic and diverse banking system is critical to the American economy,” she commented. “Large banks play an important role in our economy, but so do small and mid-sized banks. These banks are heavily engaged in traditional banking services that provide vital credit and financial support to families and small businesses. They also increase competition in the banking sector, and often have specialized knowledge and expertise in the communities they invest in.”

Treasury Secretary Yellen Speaks At The American Bankers Association’s Washington Summit

Banking System Is ‘Sound’ And Government Will Back Deposits At Smaller Banks, Yellen Promises

‘The Situation Is Stabilizing’: Yellen Says Banking System Is ‘Sound’ And Government Will Back Deposits At Smaller Banks

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