Foreign Secretary Yellin says not all uninsured deposits will be protected in future bank failures. This has way bigger implications than you would think. For those of you who have maybe been not paying attention to financial media lately, you probably might want to know that banks are blowing up and there's quite a bit of downward pressure on the economy because of what's going on in the banking sector and the government. The various branches I can't just say one of them.

but if we talk about the Treasury Secretary, if we talk about Powell from the FED, there's a couple different groups stepping into really attempt to stop the hemorrhaging and what they have done is backstop depositors. So if you work at the bank, if the FDIC takes it over, the management gets fired. If you own stock within the bank, none of those people are being protected, but people who had money in the bank. Usually you're only protected up to 250 000 and then after that you're taking on the risk of being at the right Bank In this scenario, when banks are blowing up, the various groupings of people have decided that no, we're going to ensure for everyone.

So even if you have over 250 000 if you have 250 million that is now being insured by the US government which led to a very interesting exchange that I want to share with all of you right here. Will the deposits in every Community Bank in Oklahoma regardless of their size be fully insured Now are they fully recovered every Bank every Community Bank in Oklahoma Regardless of the size of the deposit, Will they get the same treatment that Svbp just got Or Signature Bank just got Only gets that treatment if a majority of the FDIC board a super majority is super majority of the FED board and I in consultation with the President determine that the failure to protect uninsured depositors would create systemic risk and significant economic and financial consequences. So what is your plan? That determination, right? So so what is your plan to keep large depositors from moving their funds out of Community Banks into the big Banks We have seen the mergers of banks over the past decade. I'm concerned you're about to accelerate that by encouraging anyone who has a large deposit in a community bank to say we're not going to make you whole, but if you go to one of our preferred Banks we will make you whole at that point.

Um, look, I mean we're That's certainly not something that we're encouraging that is happening right now. That is happening because depositors are concerned about the bank failures that have happened and whether or not other Banks could. Also, it's happening because you're fully insured no matter what the amount is. If you're in a big Bank, you're not fully insured.

If you're in a Community Bank Well, you're not fully insured and you you were in Signature And it was. It just barely met that threshold you were at Signature. Well, we felt that there was a serious risk of contagion that could have brought down and triggered runs on many banks and that something Given that our judgment is that the banking system overall is safe and sound. Depositors should have confidence in the system and we took these actions.

So there's a special assessment that's been done on Community Banks in my state and all banks across the country. Was there any discussion that that special assessment would only apply to the larger Banks Or was it always assumed a special assessment would cover every Bank including rural banks in my state? Um, I I think I I'm not certain what the rules are around that, um, that that's for the FDIC to determine. It has been reported publicly that Svb had a large number of Chinese investors that are there, including some that were companies directly connected to the Chinese Communist Party Will those individual, those individuals, companies, entities, and investors that are Chinese investors be made whole based on Assessments in my banks in Oklahoma? So what I'm asking is will my banks in Oklahoma pay a special assessment to be able to make Chinese investors whole from Silicon Valley Bank Uninsured investors will be made whole in that bank. And I suppose that could include foreign and foreign depositors.

but I Don't believe there's any legal basis to discriminate among uninsured I Get it? But I'm just saying my Community Banks are going to pay this additional fee. It is always fascinating to me as well. The conversation that taxpayers are being made whole in this taxpayers are not going to have any kind of consequence on this. I'm sure my Bankers are going to be very excited to know they no longer pay taxes for various reasons I find to be very interesting because this is the moral hazard that a lot of people have been talking about.

and if you have listened to yell and there and more importantly if you believe Yellen, they're only going to backstop the ones that are the biggest and mess things up like how backwards is that of we're only going to help if it could be a bigger issue. So basically, if you have a small like Mom and Pop Bank in whatever region and if it goes under and if they're like no like, we don't think there's really going to be large negative implications on the banking sector on the greater economy, we're probably not going to do this. So they're now picking and choosing who survives and who doesn't survive I Think it's a fair argument that we're ending up pushing more of these Banks to get acquired by large Banks So we're getting closer and closer to an oligopoly where they're just going to end up protecting the biggest ones and then everyone else. You're just screwed.

And he brought up an interesting point of like. so if you just take a random Podunk Bank in Oklahoma that might not be a great stress on the economy. Well, it's not going to be insured. but they did step in with Svb where you literally just had the banking like the business banking for like Chinese businesses.

So we bailed those out which is so messed up because it's one thing if you're going to bail them all out. but now you're picking and choosing who you're gonna bail out and in this scenario it could. and I hope it doesn't. You could have a random bank somewhere in Middle America that goes under and if someone has over 250 000, they're not going to be insured.

but then we're with the Silicon Valley Bank or Signature where everyone got bailed out. It doesn't matter who they were, it could have been the bank of a business that's not even in the U.S It's such a bigger moral hazard than I Thought this could even possibly get to like that's insane like it might do like am I missing something here Like it seems so illogical that I I feel like I have to be missing something right? Like it just seems so absurdly ridiculous that I like I almost don't want to believe it. like I'm just assuming that I'm like nah, like I'm just dumb like I'm not getting some aspect of the overall story because it blows my mind.