European officials accuse United States of 'utter incompetence' with bank bailout

The federal government took over two failed U.S. banks in the past eight days, providing enough money to cover customers' deposits.

Published: March 17, 2023 8:45am

Updated: March 17, 2023 3:17pm

European officials are reportedly outraged by U.S. government officials' decision to take over Silicon Valley Bank that failed last week – accusing them of "incompetence."

European financial officials say the United States violated its own rules, particularly the Federal Deposit Insurance Corp. covering all deposits, despite guaranteeing individual deposits only up to $250,000, according to The Financial Times.

The FDIC worked with the Treasury Department and the Federal Reserve to secure deposits at Silicon, which failed March 10, then at Signature Bank, which failed Sunday.

After the collapse of the banks, European financial markets reportedly had their worst week this year, in which Credit Suisse also needed financial help to avoid a crisis.

(Also this week, a group of financial institutions in the U.S. agreed to deposit $30 billion in First Republic Bank to avert a collapse.)

An unnamed senior eurozone official said U.S. officials have acted with "total and utter incompetence" and hinted that they were hypocrites since America has pledge to end bank bailouts, The Times also reports. 

Regulation expert Nicolas Veron at the Peterson Institute, called the U.S. efforts in the past roughly eight days "very questionable."

"From a financial stability perspective, they really killed a fly with a sledgehammer," he said. 

Another European regulator said everyday American citizens would pay for U.S. regulators' decisions with taxes, also according to The Times. 

"At the end of the day, this is a bailout paid for by the ordinary people and it’s a bailout of the rich venture capitalists which is really wrong," he said.

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