President Joe Biden on Monday sought to reassure Americans that the U.S. banking system is safe in the wake of the failure of Silicon Valley Bank (SVB) and the federal intervention that followed.
Biden said that the government would backstop customers’ deposits at both SVB and Signature Bank in New York, and that investors in the failed banks would not be protected.[0] He also promised that the management of the banks would be fired if the bank is taken over by the Federal Deposit Insurance Corporation (FDIC).
President Biden expressed his assurance that the banking system is reliable, stating that when needed, people’s deposits will be accessible. This statement was made at the White House prior to his three-day tour to California and Nevada. Those who invested in the banks will not be shielded from the repercussions of their decision. They were aware of the risks but when those risks do not yield results, the investors will have their funds diminished. This is how the capitalist system operates.[1]
The president also said he would ask Congress and banking regulators “to strengthen the rules for banks to make it less likely this kind of bank failure would happen again and to protect American jobs and small businesses.”[2] He added that “no losses will be borne by the taxpayers,” and that the money will come from the fees that banks pay into the federal Deposit Insurance Fund.[3]
On Saturday, the Treasury, Federal Reserve and the FDIC announced that depositors of SVB would be fully protected, and that the same protections would be in place for customers of Signature Bank.[4] They also said that depositors of both banks would have access to all of their money starting Monday, March 13.[5]
Biden also addressed the cause of the crisis, blaming the weakening of financial rules by politicians in Washington and the over-reliance on the tech start-up industry by Silicon Valley Bank. “We must get the full accounting of what happened and why those responsible can be held accountable,” he said.
The president concluded his speech by reiterating his commitment to protecting small businesses and workers affected by the crisis, and to holding those responsible for the situation accountable. “The American people and American businesses can have confidence that their bank deposits will be there when they need them. I am firmly committed to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again,” he said.[6]
0. “Wall Street pummels regional banks, despite Biden’s assurances” CNN, 13 Mar. 2023, https://www.cnn.com/2023/03/13/investing/first-republic-bank/index.html
1. “Biden emphasizes US banking system is safe after Silicon Valley Bank collapse” CNN, 13 Mar. 2023, https://www.cnn.com/2023/03/13/politics/biden-banking-speech/index.html
2. “Brainard Must Help Contain SVB Crisis She Warned Was Coming” Yahoo Finance, 14 Mar. 2023, https://finance.yahoo.com/news/brainard-must-help-contain-svb-110000355.html
3. “Biden says banking system is safe, promises accountability for Silicon Valley Bank failure” Yahoo Life, 14 Mar. 2023, https://www.yahoo.com/lifestyle/biden-blames-trump-deregulation-silicon-133854058.html
4. “Biden says America’s ‘banking system is safe’ after regulators back up all SVB deposits” FierceBiotech, 13 Mar. 2023, https://www.fiercebiotech.com/biotech/biden-says-americas-banking-system-safe-after-regulators-back-all-svb-deposits
5. “Biden says ‘the banking system is safe’ after Silicon Valley Bank shutdown” NBC News, 13 Mar. 2023, https://www.nbcnews.com/politics/politics-news/biden-deliver-remarks-silicon-valley-bank-shutdown-rcna74622
6. “Amid crisis, Biden tells Americans ‘banking system is safe’” ABC News, 13 Mar. 2023, https://abcnews.go.com/Politics/biden-speaks-banking-crisis/story?id=97820883