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Crapo Joins Fox Business to Discuss Latest on Bank Fallouts and Legislation to Stop Foreign Adversaries from Buying American Farmland

Washington, D.C.--In an interview with the hosts of the Big Money Show on Fox Business--Brian Brenberg, Jackie DeAngelis and Taylor Riggs--U.S. Senate Banking Committee Member and former Chairman Mike Crapo (R-Idaho) addressed the issue of moral hazard with proposed expansion of government guarantee of all bank deposits, as well as legislation he recently backed to prevent foreign adversaries from purchasing American farmland.



To watch the video, click HERE or the image above.


On the question of whether more federal government rescues should occur if other smaller banks experience similar runs on deposits like Silicon Valley Bank:


“I think the Fed has done the correct things now . . . If this gets more broadly serious, they have to look very carefully at the notion that some are batting around that they make permanent federal guarantees of all deposits at banks.  That is going to create moral hazard that I think in the long run is simply going to transfer responsibility from bank management to the taxpayer.  The taxpayer will be on the hook and it will not actually improve the management of banks.”


On preventing moral hazard:


“Moral hazard is what occurs when banks don’t do the right job of managing their assets versus their liabilities.  In the current situation with SVB, for example, they were very well capitalized, but they did not manage their interest rate risk . . . The responsibility here has to be on the bank management and on the supervisors--the Fed and the FDIC--who are the ones who follow the way the banks are managing that moral hazard.  We need to have that be the approach where we focus rather than having a government guarantee in place that says you can manage any way you want, and if you get into a situation where you’re incurring significant losses and can’t meet the demands of your assets, then the taxpayer will pay the bill.”


On legislation to stop foreign adversaries from buying American farmland:


“In 2018, as Banking Committee Chairman, I led the effort to reform the Committee on Foreign Investment in the United States (CFIUS).  It was focused primarily on technology and very advanced technologies that we needed to protect against being stolen by China and other foreign adversaries.  Those reforms actually put into place the necessary protections to protect against these buys of agriculture in the United States, which are a significant issue.  But I support the current legislation, which has been passed in some form in 14 different states, because I want to make it really clear that the United States can manage the accumulation of our farmland by foreign adversaries.”