US Treasury Secretary Janet Yellen told a Senate panel on Thursday that the US financial system is on solid footing following the second and third largest banking collapses in the nation’s history.
His comments come after Silicon Valley Bank (SVB) and Signature Bank forced federal regulators to shut them down and protect all deposits in an effort to preserve public confidence in the US banking system.
“I can assure committee members that our banking system is strong and Americans can be sure their deposits will be there when they are needed,” Yellen told the Senate Finance Committee.
“This week’s actions demonstrate our strong commitment to ensuring our financial system remains strong and depositors’ savings remain safe.”
The regulators ensured that the bank’s customers will recover their deposits using a fund paid for by the banks’ fees.
Meanwhile, federal authorities have launched an emergency loan program to help banks. SVB faced massive unrealized losses on its long-term Treasury investments due to the Federal Reserve’s rate hikes.
The bank’s tech industry and venture capital clients scrambled to withdraw their money as it became clear that SVB faced the threat of insolvency.
Yellen acknowledged that interest rate hikes forced SVB to sell large amounts of assets at a loss, but did not say the financial system faces broader liquidity.
