Things are going from bad to worse in Joe Biden’s trainwreck of an economy.
Biden and his staff have been scrambling to try and explain away the mounting problems.
But Joe Biden clenched his fists in rage after hearing this historically bad economic news.
President Joe Biden has now presided over three of the four largest bank failures in U.S. history.
The federal government is getting desperate
Experts are warning that the Federal Reserve’s interest rate manipulations could lead to even more bank failures.
Since March of this year, First Republic Bank, Silicon Valley Bank, and Signature Bank, which had combined assets worth $531 billion, have gone under.
Most economic experts believe their failures are directly attributable to high interest rates and poor management decisions.
Even worse, the Federal Deposit Insurance Corporation (FDIC) has estimated these failures will cost U.S. taxpayers about $36 billion.
“The Federal Reserve, the Treasury, this entire administration, frankly, has been very inconsistent with their operations in financial markets,” Heritage Foundation economist E.J. Antoni told Fox News Digital. “So they will do one thing in one instance and then something completely different in the next.”
“However, if this last episode is any indication, as the federal government gets increasingly desperate in this banking crisis, as the crisis continues to escalate, what we’re seeing is an increasing willingness to basically use taxpayer money to bail out these institutions,” Antoni added.
Government action doing more harm than good
The FDIC recently announced that JPMorgan Chase would pay the agency $10.6 billion to take control of most First Republic assets.
While this may sound good, they also said the move would cost the FDIC Deposit Insurance Fund about $13 billion.
The federally managed FDIC fund was created in the 1930s to provide a safety net in the event of major bank failures.
The March failure of Silicon Valley Bank cost the Deposit Insurance Fund $20 billion and the collapse of the Bank cost another $3 billion.
“Normally we would see larger banks acquiring these regional banks because they’re a good deal right now,” Thomas Hogan of the American Institute for Economic Research said.
“Now that they’ve seen the government is willing to provide assistance, they’re going to wait until the banks have basically failed and then the government’s willing to provide some bailout package in order to make that acquisition possible,” Hogan continued. “That definitely is what happened with First Republic and JPMorgan Chase.”
Hogan also pointed out that “it’s a bad incentive. The precedent they’ve set is going to make private banks less willing to acquire or bail out these failing institutions.”
Biden’s spending spree at fault
Hogan, Antoni, and FreedomWorks economist Stephen Moore blame the bank failures on interest rate hikes that the Federal Reserve has pursued over the last year.
“A lot of these banks hold government bonds that are now worth — they’ve dropped in value by about 30% because of the huge interest rate spike over the last year. Some of their balance sheets look horrible now because of some of the Fed actions,” Moore told Fox News Digital.
“The reason the Fed had to take those actions was because we had this extraordinary spending spree,” Moore continued. “You had a completely indefensible spending spree after COVID was over. Then you had prices rise. Inflation went to 9%. And then you had the Fed forced to respond to that by this almost unprecedentedly rapid interest rate rise.”
Joe Biden is preparing to ask voters to elect him to another term in office.
And he should be very mad and worried about the state of the economy.
Patriot Political will keep you up-to-date on any developments to this ongoing story.