Biden also said that he will speak about the US banking system and reassure Americans after the failures of Silicon Valley Bank and Signature Bank…reports Asian Lite news
President Joe Biden today promised to take action against those responsible for the banking crisis in the country. His statement comes just hours after regulators closed Signature Bank, a New York-based regional-size lender.
Biden also said that he will speak about the US banking system on Monday and reassure Americans after the failures of Silicon Valley Bank and Signature Bank.
“I will deliver remarks on how we will maintain a resilient banking system to protect our historic economic recovery,” he said Sunday night in a statement that also included Biden’s promise of “holding those responsible for this mess fully accountable.”
The US President said that Secretary Janet Yellen and National Economic Council Director worked with banking regulators and have reached a solution to protect US’s financial system.
“At my direction, @SecYellen and my National Economic Council Director worked with banking regulators to address problems at Silicon Valley Bank and Signature Bank. I’m pleased they reached a solution that protects workers, small businesses, taxpayers, and our financial system,” he said.
The US government also said that all the depositors and investors will have access to “all of their money” starting Monday.
“The American people and American businesses can have confidence that their bank deposits will be there when they need them,” Biden said.
Silicon Valley Bank was shuttered on Friday by California banking regulators after a dramatic 48 hours that saw the high-tech lender’s share price plummet amid a run-on deposit by concerned customers.
In a joint statement, Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell and Federal Deposit Insurance Corporation Chairman Martin J. Gruenberg said the FDIC will make SVB and Signature’s customers whole.
By guaranteeing all deposits, even the uninsured money that customers kept with the failed banks, the government aimed to prevent more bank runs and to help companies that deposited large sums with the banks to continue to make payroll and fund their operations, CNN reported.
The Fed will also make additional funding available for eligible financial institutions to prevent runs on similar banks in the future.
“Monday will surely be a stressful day for many in the regional banking sector, but today’s action dramatically reduces the risk of further contagion,” Jefferies analysts Thomas Simons and Aneta Markowska said in a note to clients Sunday evening.
Wall Street investors were relieved that the government intervened.
Dow futures were up nearly 300 points, or 0.9 per cent late Sunday. S&P 500 and Nasdaq futures were both up 1.3 per cent. Markets had tumbled more than 3 per cent Thursday and Friday as investors feared more bank failures and systemic risk for the tech sector, CNN reported.
“The US banking system remains resilient and on a solid foundation, in large part due to reforms that were made after the (2008) financial crisis that ensured better safeguards for the banking industry,” the regulators said.
“Those reforms combined with today’s actions demonstrate our commitment to take the necessary steps to ensure that depositors’ savings remain safe.”
‘Savings of depositors safe’
Right after two US-based banks collapsed in a matter of two-to-three days, the US government and regulators on Sunday (local time) said the actions taken so far demonstrate their commitment to ensure that depositors’ savings remain safe.
“The US banking system remains resilient and on a solid foundation, in large part due to reforms that were made after the financial crisis that ensured better safeguards for the banking industry. Those reforms combined with today’s actions demonstrate our commitment to take the necessary steps to ensure that depositors’ savings remain safe,” a joint statement by Treasury, Federal Reserve, and Federal Deposit Insurance Corporation said. Silicon Valley Bank collapsed on Friday. The crisis-hit Silicon Valley Bank’s shares tumbled over 60 per cent, data showed.
Following the Silicon Valley Bank, New York-based Signature Bank was closed by the state regulators on Sunday (local time), becoming the second US bank to have collapsed.
Meanwhile, US President Joe Biden on Monday morning (local time) will deliver remarks on how his government will maintain a resilient banking system after two US-based banks collapsed and were closed by regulators.
Biden assured the American people and American businesses to have confidence that their bank deposits will be there when they need them.
“I am firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again,” a White House statement said.
As these banks collapse, the Federal Deposit Insurance Corporation (FDIC) was appointed as a receiver, which typically means it will liquidate the bank’s assets to pay back its customers, including depositors, and others.
Further, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors, the joint statement said.