Is Yellen’s Law To Guarantee All Illegal?

Is the Age of Banking Idiocy finally upon us as Treasury Sec Yellen impliedly GUARANTEES the safety of deposited TRILLIONS, i.e., with taxpayer money, but without Congressional authorization? Moral hazard now rules?

The WSJ editors think so: “Financial regulators have ignored their post-2008 rule book to contain the latest banking panic. And … Treasury Sec Janet Yellen tore it up by announcing the de facto guarantee of all $17.6 trillion in US bank deposits. Regional bank stocks rallied, but it’s important to understand what this moment means: the end of market discipline in US banking.” Yellen insisted she did the dirty deed to prevent similar future “deposit runs that pose the risk of contagion.”

But, what about the risk of irresponsible, fly by the seat of the pants progressive investment schemes du jour that trigger such “contagion”? In 2008, it was partly the Swamp’s pressure on banks & other entities to finance high-risk loans to low-income folks & now it’s partly about ESG & crypto investment mania by banking woksters. As the WSJ recalls, it was the Dodd-Frank law after the 2008 meltdown that let the FDIC guarantee uninsured deposits under a “systemic risk exception”. But, today’s regulators “stretched that exception” with their unilateral bailout of SVB & Signature. Now, Yellen has stretched that exception to the exception to infinity & beyond? As the editors note: “Ms. Yellen would court criticism in Congress if she [had] straight up declared a guarantee for all uninsured deposits, but it’s now clearly implied.” If so, isn’t “Yellen’s Law” clearly illegal?

Davd Soul