‘Banking system remains resilient’: Treasury Secretary Yellen says she has ‘full confidence’ in US banking, in talks with regulators over SVB failure
- Yellen expressed ‘full confidence’ in banking regulators following bank failure
- FDIC regulators seized SVB assets on Friday
- Yellen called a meeting with bank regulators, Treasury said
Treasury Secretary Janet Yellen assured the public Friday that the US banking system remains “resilient” after meeting with banking regulators following the failure of Silicon Valley Bank.
Yellen said she expressed “full confidence in banking regulators to take appropriate action in response and noted that the banking system remains resilient and regulators have effective tools to deal with these types of events.”
The head of the Treasury called a meeting with the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency after the spectacular failure of the bank, also known as SVB.
Yellen also called the flaw a “matter of concern” in comments to lawmakers. She was on Capitol Hill Friday to testify about the release of the president’s $6.8 trillion budget plan.
‘There are recent developments concerning some banks that I am following very closely. And when banks experience financial losses, it is and should be cause for concern,” he said.
At the White House, the economic adviser Cecilia Rouse, asked if she had confidence in the banking system, spoke of post-2008 reforms.
Treasury Secretary Janet Yellen testifies during a House Ways and Means committee hearing on President Joe Biden’s fiscal year 2024 budget request. She said in a statement that the nation’s banking system is “resilient” and expressed “full confidence” in banking regulators.
“Our banking system is fundamentally different because of the changes we’ve implemented since 2008,” Rouse said.
They have to have more capital. They have to undergo stress tests. So we know that we had to build more resilience into our banking system, which allows it to withstand these types of shocks. So I have faith that we have the tools for this sector and the regulators to absorb,” he continued. “We know that our banking system is in a fundamentally different place.”
Regulators at the Federal Deposit Insurance Corporation (FDIC) seized SVB’s assets today after depositors sparked a run on the bank following the shock announcement of a $1.8 billion loss.
“We know that our banking system is in a fundamentally different place,” Council of Economic Advisers Chair Cecilia Rouse said at the White House on Friday.
The value of the banks had reached $40 billion, four times what it was worth just five years ago. Its value in the markets plummeted 66 percent before trading was halted, with a ripple effect throughout the financial services industry.
With around $209 billion in assets, SVB is the second largest bank failure in US history after the collapse of Washington Mutual in 2008.
The Federal Deposit Insurance Corporation seized SVB’s assets today when trading was halted after its shares plunged 66 percent before trading.
A Brinks security truck is parked outside the Silicon Valley Bank in Santa Clara as investors line up outside after the bank closed its doors. The Federal Deposit Insurance Corporation (FDIC) seized SVB’s assets today as depositors, mostly tech workers and start-ups, began withdrawing their money following the shock announcement of a loss of $1.8 billion.
Yellen testified in the House on Friday amid the fallout from the bank’s failure.
The crisis is expected to have a colossal impact on the tech sector, with many startups using SVB as their only account and creditor. It is the first FDIC-insured bank to fail in more than two years, the last being Almena State Bank in October 2020.
Investors began withdrawing their money from the bank amid a market where initial public offerings of equity had cooled amid repeated rate hikes pushed by the Federal Reserve. The bank sold a $21 billion bond portfolio on Wednesday to try to keep up with withdrawals, then sold $2.25 billion worth of shares on Thursday.
