After raking in over $7 million in speaking fees from financial institutions in the two years before being confirmed, Treasury Secretary Janet Yellen now plays a major role in determining which banks are systemically important, according to her testimony at a Senate Finance Committee hearing Thursday.
Yellen had received more than $7 million in speaking fees from dozens of companies including Goldman Sachs, Bank of America, Citi, Credit Suisse, UBS, Charles Schwab and many more, according to Yellen’s public financial disclosure report. Though the Federal Deposit Insurance Corporation insures deposits up to $250,000, Yellen told the senators the government may insure additional deposits, as it did at the recently failed Silicon Valley Bank (SVB) and Signature Bank, if that bank’s failure would present a “systemic risk” to the economy.
WASHINGTON, DC – MARCH 16: U.S. Treasury Secretary Janet Yellen testifies about the Biden Administration’s FY2024 federal budget proposal before the Senate Finance Committee in the Dirksen Senate Office Building on Capitol Hill on March 16, 2023 in Washington, DC. (Photo by Chip Somodevilla/Getty Images)
“A bank only gets that treatment if a majority of the FDIC board, a super majority of the Fed board and I, in consultation with the president, determine that the failure to protect uninsured depositors would create systemic risk and significant economic and financial consequences,” Yellen said.
Treasury Department ethics official Brian Sonfield wrote that Yellen’s speeches might cause her “impartiality” to be “questioned” in a 2021 memorandum after Yellen was confirmed.
“While the amount of honoraria received was not insignificant, these discrete short-term engagements are not likely to raise impartiality concerns in the same way as longer-standing relationships like a recent employer or client,” added Sonfield.
SVB, taken over by regulators following a bank run, sold $21.4 billion in debt to Goldman at a loss, according to Reuters, in a bid to clear negative assets off its books. In exchange, the giant stands to garner a return of over $100 million in fees, according to The New York Times.
Goldman paid Yellen $67,500 for a single speech. (RELATED: Shocker: One Of America’s Most Politically Connected Banks Is Due For A Huge Profit Off Other Bank’s Failure)
In addition, big banks that have paid Yellen speaking fees and been deemed systemically important have benefited from her decision to make SVB and Signature Bank depositors whole. Bank of America paid her $45,000 for one speech and reportedly received $15 billion in new deposits after the bailout, according to sources familiar with the matter who spoke to Bloomberg.
Citi is also experiencing huge waves of deposits, according to CNN Business. Citi paid Yellen approximately $1 million in speaking fees for nine speeches, according to her disclosure.
Sonfield wrote he believes “that Dr. Yellen is in compliance with applicable laws and regulations governing conflicts of interest,” in the financial disclosure form.
The Department of the Treasury did not immediately respond to the Daily Caller News Foundation’s request for comment.
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