The president of USAJoe Biden sent a message reassurance this Monday to the Americans by stressing that the country’s banking system “is safe” and affirmed to the clients of the banks Silicon Valley Bank and Signature Bank that they will have their deposits.
“Today, thanks to my administration’s quick action in recent days, Americans can have confidence that the banking system is safe, their deposits will be there when they need them, small businesses across the country that have accounts deposited in these banks can breathe easy knowing that they will be able to pay their workers and pay their bills,” he said, quoted by CNN.
Pres. Biden says those who invested in failed Silicon Valley Bank and Signature Bank will not be protected: “They knowingly took a risk and when the risk didn’t pay off, investors lose their money. That’s how capitalism works.” https://t.co/HWi82gAbJP pic.twitter.com/3hVKFJqmZt
— ABC News (@ABC) March 13, 2023
The US president’s statements come a day after regulatory bodies launched a plan to protect deposits of the Silicon Valley Bank (SVB) after its collapse and closed another banking institution, Signature Bank, under the same parameters.
At Silicon Valley Bank
The California-based SVB announced last Wednesday that it was seeking a capital increase to try to cope with financial difficulties that had led it to dump some $21 billion worth of investments, at a loss of about 1800 million.
The announcement prompted many clients to withdraw their funds, after which regulators had to close the bank on Friday for lack of liquidity. The company’s stock price subsequently plunged, which in turn affected the banking sector in the United States and other countries.
The Treasury Department, the Federal Reserve (Fed) and the Federal Deposit Insurance Corporation (FDIC) announced Sunday that customers will have access starting Monday to all money deposited in the SVB and promised a similar plan for the Signature Bank.
reduce risk
Biden advanced that the managers of these banks “will be fired” and stressed, as the regulators had pointed out the day before, that shareholders will not be protected.
“The management of these banks will be fired. If the FDIC takes over the bank, the people who run it should no longer work there,” he said. His appearance also tried to dispel the ghosts of the 2008 financial crisis, according to a report from efe.
treasury, @federalreserve& @FDICgov released a joint statement on decisive actions taken today to protect the US economy and ensure that the US banking system continues its vital role of protecting deposits. https://t.co/q2lqREuGDw
— Treasury Department (@USTreasury) March 12, 2023
“We must reduce the risk of this happening again,” stressed the president, recalling that under the administration of Barack Obama, also a Democrat (2009-2017), “tough demands” were put in place on the banking sector that fell back in that of Republican Donald Trump (2017-2021).
For this reason, he indicated that he is going to ask Congress and regulators to strengthen the rules to reduce the chances of this type of collapse happening again and to protect jobs and small businesses.
