On Monday morning, President Joe Biden sought to reassure Americans that the banking system is safe and their deposits will be there when they need them.[0] The recent collapse of Silicon Valley Bank and Signature Bank had raised fears of a full-blown banking crisis.[1]
Biden said he will ask Congress and the banking regulators to strengthen the rules for banks and protect the jobs and small businesses of American workers.[2] He also noted that the management of these banks will be fired and investors will not be protected, as they knowingly took a risk and will lose their money when the risk doesn’t pay off.[3]
Shalanda Young, the director of the White House Office of Management and Budget, stressed in an interview with CNN that the US banking system at large was “more resilient” now, due to the reforms put in place.[4]
Biden also reiterated that no losses will be borne by taxpayers, as the money will come from the fees that banks pay into the Deposit Insurance Fund.[5] He called for a full accounting of what led to the shutdown of the two banks and why those responsible can be held accountable.
Treasury Secretary Janet Yellen also made it clear that the government is not looking to bail out the banks and the reforms put in place means that they won’t do that again.
The FDIC and Treasury Department have also promised that Silicon Valley Bank’s depositors will have access to all their money on Monday, and Biden confirmed that in his speech, saying “every American should feel confident that their deposits will be there if and when they need them.”[0]
With many Americans still bitter over Washington’s assistance to large banks during the 2008 global financial crisis, Biden made a point of saying that no bailout was happening under his watch.[6] He also sought to distinguish the action taken by his administration to that of the approach taken by his predecessors.
The reaction of Wall Street on Monday when it starts trading will be closely watched, as investors and Americans alike wait to see if Biden’s reassurances were enough to ease their concerns.[7]
0. “Biden promises ‘your deposits will be there’ amid banks’ collapse” POLITICO, 13 Mar. 2023, https://www.politico.com/news/2023/03/13/biden-silicon-valley-bank-00086745
1. “Special Report: Biden addresses banking concerns after Silicon Valley Bank, Signature Bank collapse” CBS News, 13 Mar. 2023, https://www.cbsnews.com/video/biden-on-silicon-valley-bank-signature-bank-collapse-special-report/
2. “Biden Says Saving Silicon Valley Bank Helped Economy ‘Breathe Easier’—But Not All Experts Agree” Forbes, 13 Mar. 2023, https://www.forbes.com/sites/dereksaul/2023/03/13/biden-says-saving-silicon-valley-bank-helped-economy-breathe-easier-but-not-all-experts-agree
3. “Biden: ‘No one is above the law’ in Silicon Valley Bank crash” Business Insider, 13 Mar. 2023, https://www.businessinsider.com/biden-comments-silicon-valley-bank-crash-no-one-above-law-2023-3
4. “Biden vows to hold those responsible for Silicon Valley Bank failure ‘fully accountable’” KTVZ, 13 Mar. 2023, https://ktvz.com/politics/cnn-us-politics/2023/03/12/treasury-secretary-rules-out-bailout-for-silicon-valley-bank-2/
5. “Biden says Americans should ‘feel confident’ in banking system after federal response to SVB collapse” Fox News, 13 Mar. 2023, https://www.foxnews.com/politics/biden-americans-confidence-banking-system-federal-response-svb-collapse
6. “Biden & FDIC: Joe Biden’s Big Bank Bailout” National Review, 13 Mar. 2023, https://www.nationalreview.com/the-morning-jolt/bidens-big-bank-bailout/
7. “‘Banking system is safe’: Joe Biden reassures markets in address on Silicon Valley Bank collapse – live updates” The Guardian US, 13 Mar. 2023, https://www.theguardian.com/us-news/live/2023/mar/13/silicon-valley-bank-collapse-biden-address