‘Utter Incompetence’: European Officials Accuse US Of Ripping Up Banking Rules With SVB Bailout
European officials are enraged at the U.S. for their decision to bail out Silicon Valley Bank, according to the Financial Times.
European financial regulators have ripped their American counterparts’ decision to bail out Silicon Valley Bank (SVB) in the wake of their collapse, claiming they violated their own standards in doing so, according to the Financial Times. They are particularly frustrated at the decision to cover all deposits when they were only supposed to guarantee up to $250,000.
A senior eurozone official expressed their shock at the “total and utter incompetence” of U.S. authorities and called them out for previously advocating to end bailouts during “long and boring meetings,” according to the Financial Times.
“From a financial stability perspective, they really killed a fly with a sledgehammer,” said Nicolas Véron, a regulation expert at the Washington think-tank the Peterson Institute, according to the Financial Times. Designating SVB as systemic was a “very questionable” decision that set a dangerous precedent for providing further bailouts of uninsured deposits, Véron added.
SVB collapsed on March 10 after their stocks plunged in premarket trading because of mass customer withdrawals, leading to the Federal Deposit Insurance Corporation (FDIC) shutting it down and taking control. After a weekend of speculation, officials announced they would be insuring all deposits from the bank.
President Joe Biden released a statement Sunday night saying he would hold those responsible for the bank’s collapse accountable. He promised in a press conference Monday that the banking system is safe and taxpayers will not be forced to bail out the bank because other banks would cover the costs.
A European regulator called that claim a “joke” and said U.S. banks would likely pass the cost on to their customers, according to the Financial Times. “At the end of the day, this is a bailout paid for by the ordinary people and it’s a bailout of the rich venture capitalists which is really wrong,” he said.
The Federal Reserve did not immediately respond to the Daily Caller News Foundation’s request for comment. The FDIC declined to comment.
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