The president of the United States, Joe Bidensaid in a White House speech on Monday that the country’s banking system It’s safeafter a few days of turbulence following the collapse of two banks and fears of it happening a contagion effect.
From the Roosevelt Room of the presidential villa, Biden spoke minutes before opening this Monday the markets to try to convey a message of tranquility. It did so to some extent because Wall Street subsequently opened in the red, mainly due to lower mid-sized bank shares, although it rallied later in the afternoon.
“Americans can rest assured that our banking system is secure. Your deposits will be there when you need them,” the president said.
Authorities in the United States and Europe tried on Monday to allay fears about the health of the banking system after Friday’s bankruptcies of Silicon Valley Bank (SVB) and Signature, which forced it to take unusual steps to protect deposits on Sunday, after a weekend full of deals.
At the end of the afternoon, a statement from the Federal Reserve was added to Biden’s words, announcing the appointment of Michael Bar (former Barack Obama official) to conduct a special investigation into the oversight and regulation of Silicon Valley Bank. “The facts surrounding the bank’s complaint a thorough, transparent and timely review of the Federal Reserve”, Agency chief Jerome Powell said in a statement.
For now, three banks are affected by the banking crisis in a context of aggressive rate hikes by the Fed to contain inflation: Silicon Valley Bank, Signature Bank and Silvergate Bank, heavily exposed to cryptocurrencies and whose liquidation has been announced last Wednesday.
“Taxpayers they will not suffer losses“Biden repeated, in an attempt to allay the feeling that Americans will end up paying for bankruptcy.
“The money will come from the fees banks pay for deposit insurance,” he said.
Moreover, Biden assured this investors will not be protected. “They knew they were taking a risk,” the president said. “And when risk doesn’t pay off, investors lose their money. That’s how capitalism works,” he added.
I claim too stricter laws for the banking system. He said specific regulations were passed during the Barack Obama administration for banks such as SVB and Signature to ensure “the 2008 crisis doesn’t happen again.” But “unfortunately some of the requirements (on banks) have been lifted by former President Donald Trump.”
“I will be calling on Congress and banking regulators to tighten rules for banks so that this type of bank failure is more unlikely to happen again,” he said in a televised address from the White House. And he added that the managing authorities of these banks will be “goodbye”.
US authorities announced on Sunday radical measures to completely bail out clients’ money from the bankrupt California-based SVB by promising that other institutions will help meet clients’ needs, while announcing that regulators had shut down a second tech bank, Signature Bank of New York.
In a joint statement, financial agencies and the Treasury Department said SVB customers will have access to “all their money” from Monday, March 13, and US taxpayers will not pay for the disaster.
At the same time, the Federal Reserve (Fed, central bank), the Federal Deposit Insurance Corporation (FDIC) and the Treasury Department said that “full repayments” would be made to depositors of Signature Bank, a regional lender with New York-based with significant cryptocurrency exposure that was closed on Sunday after its stock plummeted.
And in a potentially major precedent, the Fed announced it would make additional funds available to help banks meet the needs of their depositors, including withdrawals.
Meanwhile, the US authorities they are looking to sell the SVB and will hold a new auction. A first failed over the weekend.
In parallel, the British government also intervened. He announced that the Svb branch in that country had been sold to HSBC, which specified that it had been purchased for the symbolic sum of one pound: “Silicon Valley Bank (UK) was sold today to HSBC”, reads a Treasury statement. “SVB UK customers will be able to access their deposits and banking services as usual from today,” he added.
Biden, who spoke shortly before leaving for a planned trip to California, ratified in front of the cameras what he had expressed in a statement on Sunday evening: “I am glad that a quick solution has been reached that protects American workers and small businesses. and maintains secure our financial system. The solution also ensures that taxpayer dollars are not put at risk.”
“The American people and American businesses can trust that their bank deposits will be there when they need them. I am strongly committed to that hold those responsible for this disaster fully accountable and continue our efforts to strengthen oversight and regulation of the largest banks so we don’t find ourselves in this position again,” he said.
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Source: Clarin
Mary Ortiz is a seasoned journalist with a passion for world events. As a writer for News Rebeat, she brings a fresh perspective to the latest global happenings and provides in-depth coverage that offers a deeper understanding of the world around us.