President Joe Biden on Monday reassured Americans that the banking system is safe in the wake of the sudden collapse of Silicon Valley Bank (SVB) and the federal takeover of a second bank.
“Americans can have confidence that the banking system is safe. Your deposits will be there when you need them,” he said in televised remarks from the White House.
President Joe Biden said the nation’s financial systems are sound, following the swift and stunning collapse of two banks that prompted fears of a broader upheaval. He spoke from the Roosevelt Room shortly before U.S. markets opened on Monday. https://t.co/8jg9He5Iov pic.twitter.com/9SmunXAUNC
— The Associated Press (@AP) March 13, 2023
The government is ensuring that SVB depositors get their money back, said Biden. “No losses will be borne by the taxpayers,” he said. “The money will come from the fees that banks pay into the deposit insurance.”
Biden’s address came as US and European authorities moved to ease fears over the health of the banking system following the failure of Silicon Valley Bank.
US federal authorities stepped in to ensure depositors still had access to their funds at SVB and promised other institutions help in meeting customers’ needs, but markets remained on edge Monday following the bank’s sudden collapse.
In Britain, banking giant HSBC bought SVB’s UK division for just £1 ($1.2) in a rescue deal overseen by the Bank of England and the government, while French and German authorities said there were no risks to their financial systems.
Amid fears over the wider sector, President Biden vowed to hold “fully accountable” the people responsible for “this mess” before delivering his remarks on Monday morning.
“The American people and American businesses can have confidence that their bank deposits will be there when they need them,” Biden said.
In a joint statement on Sunday, the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC) and the Treasury Department said SVB depositors would have access to “all of their money” starting Monday and that American taxpayers will not have to foot the bill.
They added that depositors in Signature Bank – a New York-based regional-size lender with significant cryptocurrency exposure which was shuttered on Sunday after its stock price tanked – would also be “made whole”.
The Fed also announced it would make extra funding available to banks to help them meet the needs of depositors, which would include withdrawals.
“We are taking decisive actions to protect the US economy by strengthening public confidence in our banking system,” the statement said.
“The US banking system remains resilient and on a solid foundation,” due in large part to reforms and banking industry safeguards undertaken after the financial crisis of 2008, they added.
“Those reforms combined with today’s actions demonstrate our commitment to take the necessary steps to ensure that depositors’ savings remain safe.”
Regulators on Friday took control of SVB – a key lender to startups across the United States since the 1980s –after a huge run on deposits left the medium-sized bank unable to stay afloat on its own.
SVB’s implosion represents the largest bank failure since Washington Mutual in 2008.