NEW YORK ( Associated Press) – President Joe Biden assured Americans Monday that the nation’s financial system is safe, an effort to instill calm after the devastating and rapid collapse of two banks raised fears of a broader crisis.
There, he said, “their deposits will be there when needed.”
Bank regulators on Friday promptly shut down a Silicon Valley bank as depositors withdrew billions of dollars from the institution in a matter of hours. It was the second worst bankruptcy in US history, behind only the 2008 Washington default. But the financial carnage was swift: New York-based Signature Bank also failed.
Speaking from the White House shortly before his trip to the US West Coast, the president said he was responsible for holding the account and pushed for better care and regulation of the largest banks. And he promised that he would not bear the losses of his treasury.
“Everything,” he said, “we must know everything.” “Americans can trust that their financial system is safe.”
Biden added that bank managers should be fired.
“If the FDIC takes over a bank, the people who run it should no longer work there,” he said, referring to the Federal Deposit Insurance Corporation, the agency responsible for ensuring the stability of the banking system.
With more than $110 billion in assets, Signature Bank is the third largest bank failure in US history. Another troubled bank, First Republic Bank, announced on Sunday that its health had been bolstered by access to financing from the Federal Reserve and JPMorgan Chase.
The event caused concern in the markets at the beginning of Monday. Asian and European markets fell, but not the trigger.
In an effort to bolster confidence in the banking system, the Treasury Department, the Federal Reserve and the FDIC confirmed on Sunday that all Silicon Valley Bank customers will be protected and will be able to access their money.
“This step will ensure that the United States banking system continues to perform its vital role of protecting deposits and providing access to credit to families and businesses in a way that promotes strong and sustainable economic growth,” the agencies said in a joint statement.
Under the plan, Silicon Valley Bank and Signature Bank depositors, including those whose funds exceed the $250,000 insurance limit, will be able to access their money on Monday.
Britain is also moving quickly, over the weekend as the sale of Silicon Valley Bank UK Ltd. to be established, the UK arm of the California bank, for a nominal sum of Rs.
Although it is a small bank, holding less than 0.2% of UK bank deposits, according to central statistics, it has played a significant role in the start-up of technology and biotech-ups, which the British government relies on to boost economic growth.
Jeremy Hunt, Britain’s head of the treasury, said some of the country’s top tech companies were “destroyed”.
Hunt stated that there had never been a “systemic risk” to the British banking system.
Silicon Valley Bank began to slide into insolvency when it was forced to liquidate some of its losing treasury bonds to fund customer liquidations. Under the new H program, banks can put those securities up as collateral and borrow from emergency credit.
The Treasury reserved 25,000 million dollars to compensate for the damages suffered. The official said, however, that he does not expect anyone to use the money, since the risk of failure of the pledge offered is too great.