Bank situation stabilising, different from 2008, says Treasury Secretary Janet Yellen

Bank situation stabilising, different from 2008, says Treasury Secretary Janet Yellen AP Updated: March 21st, 2023, 22:24 IST in Business 0 US Treasury Secretary Janet Yellen. Pic- Wikimedia/ Commons Share on Facebook Share on Twitter Share on WhatsApp Share on Linkedin Washington: Treasury Secretary Janet Yellen projected calm Tuesday after recent regional bank collapses but told a gathering of bankers that additional rescue arrangements “could be warranted” if any new failures at smaller institutions jeopardise financial stability. Yellen, who made her remarks at the American Bankers Association, said that overall “the situation is stabilising.

” “And the U. S. Banking system remains sound,” Yellen said, drawing clear differences between recent events and the 2008 financial meltdown, which triggered trillions of dollars of financial losses globally.

“This is different from 2008,” she said. “2008 was a solvency crisis, rather what we’re seeing now is contagious bank runs. ” Yellen’s remarks come after a series of troubling bank developments this month.

Silicon Valley Bank, based in Santa Clara, California, failed on March 10 after depositors rushed to withdraw money amid anxiety over the bank’s health. It was the second-largest bank collapse in U. S.

History. Regulators convened over the following weekend and announced that New York-based Signature Bank also had failed. They said that all depositors at both banks, including those holding uninsured funds, those exceeding $250,000, would be protected by federal deposit insurance.

And last week a third bank, San Francisco-based First Republic Bank, was fortified by $30 billion in funds raised by 11 of the biggest U. S. Banks in an attempt to prevent it from collapsing.

The government is now determined to restore public confidence in the banking system and to prevent any more turmoil. The Justice Department and the Securities and Exchange Commission have launched investigations into the Silicon Valley Bank collapse, and President Joe Biden has called on Congress to strengthen rules on regional banks and to impose tougher penalties on executives of failed banks. Yellen said the government’s intervention was necessary to “protect the broader banking system” and more rescue efforts could be necessary, noting that the government is still closely monitoring the banking sector.

“Similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion,” she said. When Yellen was asked by the association’s president, Rob Nichols, what policies need to be adjusted in light of recent events, she said, “I don’t want to speculate at this point on what those adjustments might be. What I’m focused on is stabilizing our system.

” Yellen faced the Senate Finance Committee last week and offered upbeat reassurances to rattled bank depositors and investors that the U. S. Banking system “remains sound” and Americans “can feel confident” about the safety of their deposits.

She will appear in front of congressional panels twice more this week, in the Senate and the House, and will inevitably face more questions about the nature of the bank failures and the government’s effort to quell them. “Let me be clear: The government’s recent actions have demonstrated our resolute commitment to take the necessary steps to ensure that depositors’ savings and the banking system remain safe,” she said. While details are still being released on the banks’ failures, Democratic lawmakers and some economists say a 2018 rollback of portions of a far-reaching 2010 law intended to prevent a future financial crisis were a primary cause of the institutional failures.

Ahead of Yellen’s speech, at a panel discussing the state of the banking system, Scott Anderson, president of Zions Bank, said he doesn’t think the 2018 rollback is related to the bank failures. “Congress needs to be careful,” Anderson said. “They need to look at what happened.

They need to have a thorough debate and a thorough discussion. But they shouldn’t jump to any immediate conclusions. I don’t think these failures show that there’s any problem within the banking regulations that we have now.

” AP Tags: Janet Yellen Share Tweet Send Share Suggest A Correction Enter your email to get our daily news in your inbox. Leave this field empty if you’re human: Related Posts Unlike global economy, India would not slow down: RBI article March 21, 2023 Moody’s downgrades outlook for UBS to negative March 21, 2023 Amazon deepens tech gloom as 503 firms lay off 1. 5 lakh employees March 21, 2023 Fears of heavy job losses growing after UBS takeover of Credit Suisse March 21, 2023 Gold prices set to go up: Experts March 21, 2023 Sensex, Nifty rebound nearly 1% on firm global trends, buying in Reliance March 21, 2023 Leave a Reply Cancel reply Your email address will not be published.

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