Who Gets Bailouts And Who Doesn't

On the selective application of right-wing constitutional doctrine.

Jimmy Stewart had to spend his honeymoon fund to stop a bank run. Silicon Valley Bank and Signature Bank don’t have that problem.

It used to be that we bailed out banks because they were too big to fail. The lesson of the Silicon Valley Bank and Signature Bank bailouts (which, yes, are bailouts for the depositors, not the banks themselves, though this will grease the government’s auctioning off of the banks) is that some banks are, um, too midsized to fail. Don’t be fooled by the description of these as the second- and third-biggest bank failures in history. Factoring in inflation, Silicon Valley and Signature have half and one-third, respectively, the assets of Washington Mutual, the biggest bank failure in history, which occurred 15 years ago.

So. The depositors or two midsized banks, one of them deep into crypto assets, which is freaking insane, get an FDIC bailout without a congressional appropriation. But (according to the Fifth Circuit) the Consumer Finance Protection Bureau may not issue a regulation protecting poor people against predatory payday lenders because … CFPB doesn’t get a congressional appropriation. CFPB is financed exactly the same way as FDIC, through bank fees. (The only difference is that in CFPB’s case, the Federal Reserve plays middleman.) Slightly different but still close enough to warrant comparison is the Supreme Court’s likely forthcoming decision to disallow President Joe Biden’s student debt forgiveness, again on the grounds that Congress didn’t appropriate the money (though Congress did authorize the executive branch to spend this frigging money during an emergency like, well, the Covid epidemic).

All this is the subject of my latest piece in The New Republic. Please read it here.