Speaking to reporters before traveling to California on Monday, President Joe Biden sought to reassure Americans that the U.S. banking system is secure following the collapse of Silicon Valley Bank.
“Americans can have confidence that the banking system is safe,” the president said Monday. “Your deposits will be there when you need them. Small businesses across the country that deposit accounts at these banks can breathe easier knowing they’ll be able to pay their workers and pay their bills, and their hard-working employees can breathe easier as well.”
Biden’s remarks came days after the California-based bank collapsed, the second-largest bank failure in U.S. history, and one day after New York-based Signature Bank was shuttered.
The president detailed the efforts his administration took to intervene in the Silicon Valley Bank collapse, including the Federal Deposit Insurance Corporation taking control of the doomed bank’s assets and several immediate actions taken by Treasury Secretary Janet Yellen to protect Americans’ interests.
Biden sought to assure customers that they will be protected and “have access to their money as of today,” and emphasized the point that “no losses will be borne by the taxpayers.”
“Instead, the money will come from the fees that banks pay into the Deposit Insurance Fund,” Biden continued. “Because of the actions that our regulators have already taken, every American should feel confident that their deposits will be there if and when they need them.”
The president also made clear that management in the banks will be fired – “If the bank is taken over by FDIC, the people running the bank should not work there anymore.” – and emphasized that investors in the banks will not be protected.
“They knowingly took a risk, and when the risk didn’t pay off, investors lose their money,” Biden said. “That’s how capitalism works.”
He called for a probe into what happened, pledging to hold those who led to the banks’ failures to account.
“We must get the full accounting of what happened and why those responsible can be held accountable,” Biden said. “In my administration, no one is above the law.”
Biden called on Congress and regulators to “strengthen the rules for banks” to “reduce the risk of this happening again.”
“Unfortunately, last administration rollback some of these requirements,” he said, taking a jab at his predecessor. “I’m gonna ask Congress and the banking regulators to strengthen the rules for banks to make it less likely this kind of bank failure would happen again, and to protect American jobs and small businesses.”
At more than $110 billion in assets, Signature Bank is the third-largest bank failure in U.S. history. Another beleaguered bank, First Republic Bank, announced Sunday that it had bolstered its financial health by gaining access to funding from the Fed and JPMorgan Chase.
The developments left markets jittery as trading began Monday. The Asian and European markets fell but not dramatically, and U.S. futures were down.
In an effort to shore up confidence in the banking system, the Treasury Department, Federal Reserve and FDIC said Sunday that all Silicon Valley Bank clients would be protected and able to access their money.
“This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth,” the agencies said in a joint statement.
The Associated Press contributed to this report.
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