Thanks for listening to The Gist. If you want to check out an ad free version and bonus

content, go to subscribe.micpesca.com. It is the best way to directly support our endeavors.

Sturrs. Day March 23rd, 2023 from Peach Fish Productions, it's The Gist on Mic Pesca.

Secretary of Treasury Janet Yellen moved markets yesterday when she testified on Capitol Hill.

All that I have said is that when the failure of a bank is judged by super majorities of the FDIC board,

the Fed board and myself in consultation with the president, when such a failure is deemed to

create systemic risk, which I think of as the risk of a contagious bank run, that we are likely

to invoke the systemic risk exception, which permits the FDIC to protect all depositors, and that

that would be a case-by-case determination. I understand. I did not consider or discussed anything

having to do with blanket insurance or guarantees of what costs it. The last time I moved to

market is when I bumped into a kiosk at the mall at my right. I am not right. Is Janet Yellen right?

I say she is. I say the markets were stupid to move, or maybe I'm stupid to buy into the narrative

that an anodine statement actually made markets move instead of a hundred other factors. But were

really financial professionals out there who thought the secretary of the treasury would say,

you know what? By fiat, I've decided to rewrite a century of banking policy. Now, from now on,

everyone's insured forever! Now, in practicality, the government will not vow to backstop all bank

deposit losses, but also in practicality they will backstop bank deposit losses. The risk of contagion

is much greater than the actual costs of trying to keep the contagion contained. In any case,

the deposits above $250,000 in signature or SVB were saved, and at no cost, thus far, to you or me.

The banking system depends on confidence, and the federal government can lend confidence for free.

It's good that some company out there with, I don't know, $850,000 on deposit will,

but their money in a bank and never think about it. Because then they'll be able to meet pay

...