President Donald Trump said Wednesday that he’s proposing to cut the amount of funding the U.S. Central Bank has available to small and midsize banks, a move that could potentially save the Midwestern bank sector a staggering $10.5 trillion.
The president announced the proposal at a press conference Wednesday in which he also called for the closure of the $1.9 trillion Troubled Asset Relief Program, which has largely been blamed for the financial collapse that has wiped $5 trillion out of the economy.
The president said he would use the money to help banks “restore confidence” and ensure they have enough liquidity.
But he said the bailout will be used only if the banks can prove they have sufficient liquidity.
“We have the tools to save the banks.
We have the money, but if they don’t have it, we can’t bail them out,” Trump said.”
So, let me ask you, can you imagine if we put out a press release saying the U,S.
Treasury was putting out a statement that we’re going to save $10,000 for every bank that’s in trouble, that we were going to put out $10 million for every big bank?”
Trump said, adding, “You would not believe the size of the difference.”
Trump said that if the bank bailouts aren’t successful, the government could step in and rescue the banks from the brink of bankruptcy.
He also suggested that Congress and the Federal Reserve should work together to help small banks in the region.
“If they can’t save their banks, we have the power,” Trump told reporters.
“We have a great system in the United States of America.
We’ve got a tremendous amount of liquidity.”
But Trump also said he believes that Congress is in a better position to help these banks than the Fed and said he doesn’t want Congress to step in.
“The Fed has done it.
We’re going back in there.
We’ll do it.
And I’ll let the Fed do it,” Trump added.
“Congress has a different view.”
The president’s announcement comes as the Federal Deposit Insurance Corporation has issued a report that said banks will need about $1 trillion in relief over the next five years to stay afloat.
The FDIC’s report came a day after the FDIC said the banks will be able to meet their capital needs with a $300 billion bailout.
The FDIC estimates that $100 billion of the bailout money could come from the elimination of the Troubled Assets Relief Program.
The $300bn in capital would come from “dividends and interest income,” according to the FDIP report.
That means the banks would be able only to repay about $75 billion of their capital requirements.
The other $100bn would come through interest rate hikes.
The banks are expected to make $100.7 billion in capital payments over the five years, and $15.3 billion will come from interest rates.
But the FDIF report also estimated that $8.9 billion of this would come out of bank deposits, and the remaining $15 billion would come by way of fees on the fees collected by banks and the federal government.
That leaves the remaining roughly $8 billion in funding the banks could get from Congress to keep them afloat.