- Jim Cramer has criticized Federal Home Loan Bank’s decision to bail out Silvergate.
- Silvergate received $4.3 billion to carry out operations after FTX collapsed.
- John Reed Stark said “liberty dies” as US taxpayers subsidize crypto frauds.
CNBC show Mad Money host, Jim Cramer retweeted a post about the Federal Home Loan Bank bailing out the crypto-friendly bank Silvergate with $4.3 billion, calling it “dangerous.” He further adds that this is “NOT business as usual,” as he warns the public about how “dangerous this is all getting.”
The original tweet was posted by John Reed Stark Consulting LLC President John Reed Stark. He had simultaneously shared an article by the American Banker and highlighted that Silvergate received a $4.3 billion bailout loan from the Federal Home Loan Bank (FHLB) to save off a bank run. Stark added,
US taxpayers are now officially subsidizing crypto fraud/grift in the first US crypto-bailout, all done in plain view. So this is how liberty dies.
According to the article, when the popular crypto exchange FTX collapsed, depositors started pulling out their money from Silvergate Capital Corp. However, the California-based bank acquired liquidity via a “quasi-government agency.”
The bank’s company filings revealed the funds it received from San Francisco’s FHLB, in the fourth quarter of 2022, which supported La Jolla, Silvergate to continue another run on deposits. Currently, the bank holds $4.6 billion in cash, the majority of which is coming from advances from the FHLB, as per financial metrics shared by Silvergate in January.
While this move emphasizes the crypto industry’s presence in the mainstream banking system, the Home Loan banks themselves face scrutiny under the Federal Housing Finance Agency, as their purpose gets reviewed.
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Source: https://coinedition.com/cnbc-host-jim-cramer-calls-feds-loan-to-crypto-bank-dangerous/