US Treasury Secretary Janet Yellen during a press conference. file | Photo Credit: Reuters
Treasury Secretary Janet Yellen is trying to calm the project after regional bank failures, saying the US banking system is “robust”, but additional rescue arrangements may be “warranted” if any new failures at smaller institutions threaten financial stability. poses a risk to
In an excerpt of remarks prepared for delivery to the American Bankers Association on Tuesday, Ms. Yellen says that overall “the situation is stabilizing.” “And the US banking system remains strong,” Yellen says.
Ms Yellen’s comments followed a series of troubling incidents at the bank this month.
Silicon Valley Bank, based in Santa Clara, California, failed on March 10, as depositors rushed to withdraw money amid concerns about the health of the bank.
It was the second largest bank collapse in US history. Regulators convened the following weekend and announced that New York-based Signature Bank had also failed. He added that all depositors of both banks, including those with uninsured funds of more than USD 250,000, would be protected by federal deposit insurance.
And last week a third bank, San Francisco-based First Republic Bank, was reinforced with $30 billion in money raised by 11 of the biggest US banks to prevent it from collapsing.
The government is now determined to restore public confidence in the banking system and prevent any further turmoil. The Justice Department and the Securities and Exchange Commission have launched investigations into the collapse of the Silicon Valley bank, and President Joe Biden has called on Congress to strengthen regulations on regional banks and impose tougher penalties on executives of failed banks.
Ms. Yellen said in her prepared remarks that government intervention was necessary to “protect the broader banking system” and that more rescue efforts may be necessary.
“Similar actions may be warranted if smaller institutions suffer deposit runs that pose a risk of contagion,” she says.
Ms Yellen faced the Senate Finance Committee last week and offered upbeat assurances to troubled bank depositors and investors that the US banking system “remains robust” and that Americans “can feel confident” about the safety of their deposits.
She will appear twice more this week before congressional panels in the Senate and the House, and will inevitably face more questions about the nature of the bank’s failures and the government’s attempt to suppress them.
“Let me be clear: the government’s recent actions demonstrate our firm commitment to taking the necessary steps to safeguard depositors’ savings and the banking system,” he added.