US President Joe Biden. Photo- Reuters
Washington: US President Joe Biden said that together with Barack Obama, the administration had worked out tough requirements on banks to ensure that a financial crisis like that of 2008 does not happen again.
“During the Obama-Biden administration we put in place tough requirements on banks like Silicon Valley Bank and Signature Bank, including the Dodd-Frank law, to make sure that the crisis we saw in 2008 would not happen again,” the president said in a statement.
He added, “Unfortunately, the last administration rolled back some of these requirements. I’m going to ask Congress & banking regulators to strengthen rules for banks to make it less likely this kind of bank failure would happen again & to protect American jobs & small businesses.”
Providing some relief to customers, Biden said, “Small businesses across the country that had accounts at Silicon Valley Bank & Signature Bank can breathe easier knowing they’ll be able to pay their workers. It won’t cost taxpayers a dime. This is paid for with the fees that banks pay into Deposit Insurance Fund.”
Earlier today, the president insisted that the system was safe after the second-and third-largest bank failures in the nation’s history happened in the span of 48 hours. In response to the crisis, regulators guaranteed all deposits at the two banks and created a program that effectively thews a lifeline to other banks to shield them from a run on deposits.
“Your deposits will be there when you need them,” Biden told the public, seeking to project calm. He also said the banking executives responsible for the failures would be held accountable.
Fed to review supervision of SVB
The Federal Reserve announced that it would reassess its supervision of Silicon Valley Bank.
Michael Barr, the Fed’s vice chair for supervision said, “We need to have humility and conduct a careful and thorough review of how we supervised and regulated this firm, and what we should learn from this experience.”
Regulators closed the bank Friday after depositors rushed to withdraw their funds all at once. The only larger failure in U.S. banking history was the 2008 collapse of Washington Mutual. New York-based Signature Bank was seized by regulators late Sunday in the third-largest failure in the US.
In both cases, the government agreed to cover deposits, even those that exceeded the federally insured limit of $250,000.
With inputs from AP.
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