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Will Americans end up footing the bill for bank failures?

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Will Americans end up footing the bill for bank failures?

WASHINGTON (AP) — The federal government’s response to the failure of two giant banks has already concerned lots of of billions of {dollars}. So will abnormal Individuals find yourself paying for it, a technique or one other? And what is going to the worth tag be?

It might be months earlier than the solutions are totally identified. The Biden administration mentioned it would assure uninsured deposits at each banks. The Federal Reserve introduced a brand new lending program for all banks that have to borrow cash to pay for withdrawals.

On Thursday, the Fed offered the primary glimpse of the dimensions of the response: It mentioned banks had borrowed about $300 billion in emergency funding prior to now week, with practically half that quantity going to holding corporations for the 2 failed banks to pay depositors. The Fed didn’t say what number of different banks borrowed cash and added that it expects the loans to be repaid.

The purpose is to forestall a broadening panic wherein clients rush to tug out a lot cash that even wholesome banks buckle. That situation would unsettle your entire monetary system and threat derailing the financial system.

Taxpayers will in all probability bear no direct price for the failure of Silicon Valley Financial institution and Signature Financial institution. However different banks could have to assist defray the price of protecting uninsured deposits. Over time, these banks may move larger prices on to clients, forcing everybody to pay extra for providers.

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Listed below are some questions and solutions about the price of the financial institution collapses:

HOW IS THE RESPONSE BEING PAID FOR?

Most of the price of guaranteeing all deposits at each banks will possible be coated by the proceeds the Federal Deposit Insurance coverage Corp. receives from winding down the 2 banks — both by promoting them to different monetary establishments or by auctioning off their property.

Any prices past that might be paid for out of the FDIC’s deposit insurance coverage fund, which is usually used within the occasion of a financial institution failure to reimburse depositors for as much as $250,000 per account. The fund is maintained with charges paid by collaborating banks.

Each Silicon Valley and Signature banks had a strikingly excessive share of deposits above that quantity: 94% of Silicon Valley’s deposits have been uninsured, as have been 90% of deposits at Signature. The typical determine for giant banks is about half that stage.

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If mandatory, the insurance coverage fund will likely be replenished by a “particular evaluation” on banks, the FDIC, Fed and Treasury mentioned in a joint assertion. Although the price of that evaluation may in the end be borne by financial institution clients, it’s not clear how a lot cash can be concerned.

Kathryn Decide, a regulation professor at Columbia College, mentioned an even bigger price to shoppers and the financial system may stem from probably main adjustments to the monetary system that end result from this episode.

If all buyer deposits have been thought of assured by the federal government, formally or informally, then rules would have to be strengthened to forestall financial institution failures or reduce their prices once they do occur. Banks might need to pay completely larger charges to the FDIC.

“It’s going to require us to revisit your entire financial institution regulatory framework,” Decide mentioned. “That’s way more vital than the modest prices that different banks can pay.”

WILL TAXPAYERS BE ON THE HOOK?

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President Joe Biden has insisted that no taxpayer cash will likely be used to resolve the disaster. The White Home is determined to keep away from any notion that common Individuals are “bailing out” the 2 banks in a manner much like the extremely unpopular bailouts of the most important monetary companies throughout the 2008 monetary disaster.

“No losses related to the decision of Silicon Valley Financial institution will likely be borne by the taxpayer,” learn the joint assertion from the Treasury, Fed and FDIC.

Treasury Secretary Janet Yellen defended that view Thursday underneath powerful questioning from GOP lawmakers.

The Fed’s lending program to assist banks pay depositors is backed by $25 billion of taxpayer funds that might cowl any losses on the loans. However the Fed says it’s unlikely that the cash will likely be wanted as a result of the loans will likely be backed by Treasury bonds and different protected securities as collateral.

Even when taxpayers aren’t immediately on the hook, some economists say the banks’ clients nonetheless stand to learn from authorities help.

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“Saying that the taxpayer gained’t pay something ignores the truth that offering insurance coverage to any individual who didn’t pay for insurance coverage is a present,” mentioned Anil Kashyap, an economics professor on the College of Chicago. “And that’s sort of what occurred.”

SO IS THIS A BAILOUT?

Biden and different Democrats in Washington deny that their actions quantity to a bailout of any variety.

“It’s not a bailout as occurred in 2008,” Sen. Richard Blumenthal, a Democrat from Connecticut, mentioned this week whereas proposing laws to toughen financial institution regulation. “It’s, in impact, safety of depositors and a safety measure to cease a run on different banks throughout the nation.”

Biden has careworn that the banks’ managers will likely be fired and their buyers is not going to be protected. Each banks will stop to exist. Within the 2008 disaster, some monetary establishments that obtained authorities monetary support, just like the insurer AIG, have been rescued from near-certain chapter.

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But many economists say the depositors at Silicon Valley Financial institution, which included rich enterprise capitalists and tech startups, are nonetheless receiving authorities assist.

“Why is it smart capitalism for any individual to take a threat, after which be protected against that threat when that threat really occurs?” requested Raghuram Rajan, a finance professor on the College of Chicago and former head of India’s central financial institution. “It’s in all probability good for the quick time period within the sense that you just don’t have a widespread panic. … However it’s problematic for the system long run.”

Many Republicans on Capitol Hill argue that smaller group banks and their clients will shoulder a number of the price.

Banks in rural Oklahoma “are about to pay a particular price to have the ability to bail out millionaires in San Francisco,” Sen. James Lankford, a Republican from Oklahoma, mentioned on the Senate flooring.

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Related Press author Fatima Hussein and video journalist Rick Gentilo contributed to this report.

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Palestinian journalist, 19, killed in Israeli raid after receiving threats

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Palestinian journalist, 19, killed in Israeli raid after receiving threats

Hassan Hamad was killed in an attack on his home in Jabalia camp, taking the total number of journalists killed to 175.

Israeli forces have killed Palestinian journalist Hassan Hamad in an air strike on his home in northern Gaza’s Jabalia refugee camp, days after the slain journalist said he was warned by an Israeli officer to stop filming in Gaza.

With the killing of the 19-year-old journalist, whose work appeared on Al Jazeera and other networks, the number of Palestinian journalists killed since the war began has risen to 175, according to Gaza’s Government Media Office. The Committee to Protect Journalists (CPJ) says at least 128 journalists and media workers are among the more than 41,000 people killed since Israel launched the devastating war on Gaza in October 2023.

Colleagues and the Government’s Media Office in Gaza confirmed Hamad’s death, saying the journalist’s home was deliberately attacked to silence him after he received threats.

“Hassan Hamad, the journalist who did not live past the age of 20, resisted for a full year in his own way. He resisted by staying away from his family so they wouldn’t be targeted. He resisted when he struggled to find an internet signal, sitting for an hour or two on the rooftop just to send the videos that reach you in seconds,” a post on Hamad’s X account posted by his colleague said.

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“At 6am (03:00 GMT), he called me to send his last video. After a call that didn’t last more than a few seconds, he said, ‘There they are, there they are, it’s done,’ and hung up,” the colleague added.

Hamad had been documenting Israel’s war in Gaza for more than a year and worked as a freelance TV reporter.

According to Palestinian journalist Maha Hussaini, a few days before Hamad’s death, he had been threatened by an Israeli officer through a Whatsapp message and several calls, ordering him to stop filming in Gaza.

“‘Listen, If you continue spreading lies about Israel, we’ll come for you next and turn your family into […] This is your last warning’…” Hussaini posted on X, sharing the message Hamad had received.

The Israeli government has not yet commented on his death.

“Every time a journalist is killed, injured, arrested, or forced to go to exile, we lose fragments of the truth,” CPJ Program Director Carlos Martinez de la Serna said in a statement on Friday.

“Those responsible for these casualties face dual trials: one under international law and another before history’s unforgiving gaze,” he added.

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New Lonely Island Song ‘Sushi Glory Hole’ Premieres on ‘SNL’; Raps About Secret Sushi Spots Around NYC

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New Lonely Island Song ‘Sushi Glory Hole’ Premieres on ‘SNL’; Raps About Secret Sushi Spots Around NYC

In the first Lonely Island song of the 50th season of “SNL,” the beloved trio of Andy Samberg, Jorma Taccone and Akiva Schaffer debuted “Sushi Glory Hole,” a humorous take on a fictional app where you can find sushi in a hole in a bathroom around New York.

“SNL” alumna Maya Rudolph, who has been portraying presidential candidate Vice President Kamala Harris during the new season, was on hand for the video. “Gentleman, what do you have for us today?” she asked in the video opener.

“Sushi glory hole,” rapped Samberg. “Imagine that. Instead of getting strange [expletive] you’ll be getting a snack.” A long refrain of “Hear us out, hear us out, hear us out,” played on loop as the trio tried to get others on board with their idea.

Dressed as 1980s businessmen, the Lonely Island members, and Bowen Yang, rapped about sushi in bathrooms, with suggestive lyrics, singing, “So drop to your knees and get ready for some fish.” The digital short featured funny evocative imagery of slices of sushi being presented through holes in bathroom walls. The trio rapped, “Hit the bathroom stall, and find a sushi-sized hole in the bathroom wall.”

“Hit the map,” they said, showing a phone with a lit-up map with “SGH” locations all around Manhattan, where one could find a sushi glory hole. They rapped on, defending the unorthodox food-related business idea, saying, “You got nothing to fear. It’s not weird. It’s sushi being through a hole in the wall.”

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They rapped about the different ideal circumstances for a “SGH.” Samberg sang about sushi glory holes in nightclubs and how it’s better than eating in the middle of a street. “Make a wish and prepare for some shockingly high-grade fish.”

“Don’t leave, hear us out. No substitutions or special requests,” they said.

Stand-up comedian Nate Bargatze was this episode’s guest and musical group Coldplay was the musical guest.

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Iran's Ayatollah Khamenei defends missile barrage against Israel in rare sermon

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Iran's Ayatollah Khamenei defends missile barrage against Israel in rare sermon

Iran’s Supreme Leader Ayatollah Ali Khamenei declared in a rare sermon Friday that his country’s ballistic missile attack on Israel earlier this week was “legal and legitimate” and that the “resistance in the region will not back down even with the killing of its leaders.” 

The public address from Khamenei was his first during Friday prayers in Tehran in nearly five years, according to the AFP.  

Khamenei said Iran will not “procrastinate nor act hastily to carry out its duty” in going after Israel, Reuters reports. 

The news agency cited him as saying that Tuesday’s barrage of nearly 200 missiles fired by Iran at Israel was “legal and legitimate” and the minimum punishment for Israel’s “crimes.” 

IRAN WARNS OF ‘DECISIVE RESPONSE’ IF ISRAEL CROSSES ‘RED LINES’ 

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Iran’s Supreme Leader Ayatollah Ali Khamenei speaks during Friday Prayers and a commemoration ceremony of Hezbollah leader Hassan Nasrallah in Tehran, Iran, on Oct. 4. (Office of the Iranian Supreme Leader/West Asia News Agency/Reuters)

“The resistance in the region will not back down even with the killing of its leaders,” Khamenei reportedly added, mentioning recently slain Hezbollah leader Hassan Nasrallah during the speech. 

The remarks came as the Israel Defense Forces announced Friday that Mohammad Rashid Sakafi, the commander of Hezbollah’s Communications Unit, was killed in an airstrike in Beirut, Lebanon. 

“Sakafi was a senior Hezbollah terrorist, who was responsible for the communications unit since 2000,” the IDF wrote on X. “Sakafi invested significant efforts to develop communication capabilities between all of Hezbollah’s units.” 

ISRAEL BANS UN SECRETARY-GENERAL OVER ANTI-ISRAEL ACTIONS 

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Iran's Supreme Leader Ayatollah Ali Khamenei speaks in Tehran

Iran’s Supreme Leader Ayatollah Ali Khamenei said Friday that Iran’s missile attack on Israel this week was “legal and legitimate,” Reuters reports.  (Office of the Iranian Supreme Leader/West Asia News Agency/Reuters)

National Security Adviser Jake Sullivan said earlier this week that the Iranian missile attack on Israel was “defeated and ineffective” and that the U.S. military coordinated with the IDF to repel the strikes.  

“U.S. naval destroyers joined Israeli Air Defense units in firing interceptors to shoot down inbound missiles. President Biden and Vice President Harris monitored the attack and the response from the White House Situation Room, joined in person and remotely by their national security team,” Sullivan said during a briefing.  

Israel's Iron Dome anti-missile system

Israel’s Iron Dome anti-missile system intercepts rockets during the missile attack, as seen from Ashkelon, Israel, on Tuesday, Oct. 1. (Reuters/Amir Cohen)

 

“This is a significant escalation by Iran, a significant event, and it is equally significant that we were able to step up with Israel and create a situation in which no one was killed in this attack in Israel… We are now going to look at what the appropriate next steps are to secure, first and foremost, American interests and then to promote stability to the maximum extent possible as we go forward,” he added. 

Fox News Digital’s Michael Dorgan contributed to this report. 

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