Treasury secretary Janet Yellen said the federal government is willing to take action if required nearly two weeks after Silicon Valley Bank (SVB), Silvergate, and Signature collapsed.
U.S. regulators started developing a strategy immediately after the banking crisis, during which Yellen initially declared that no rescue would be required. Instead, the authorities at SVB and Signature guaranteed both insured and uninsured deposits. The U.S. Federal Reserve also introduced a brand-new method to assist lenders in covering withdrawals.
The failures of SVB and Signature Bank will be discussed at a meeting that Congress has called for on March 29.
Yellen will defend recent government actions as “decisive and forceful moves” in order to protect the banks and the larger economic impact of the issue.
According to a speech to be delivered on Tuesday, Yellen said that government intervention was required to safeguard the larger US banking system, and analogous measures may be necessary if smaller institutions have deposit runs that raise the possibility of contagion.
In addition, she claimed that government action had preserved the “vital role” that small and midsize lenders play in the American economy.
“The Treasury is committed to ensuring the ongoing health and competitiveness of our vibrant community and regional banking institutions.”
US president on the recent collapse
President of the United States, Joe Biden, stated that he is “firmly committed” to bringing those responsible for the most recent bank collapses to justice. Moreover, He added that there would be “no expense to the taxpayer” in protecting depositors connected to SBV and Signature.
Both the Securities and Exchange Commission and the Department of Justice are allegedly conducting investigations into the incident. Around 186 American banks have been identified by economists as being vulnerable to failure.