President Biden Assures Americans that Bank Deposits are Safe
President Joe Biden sought to reassure Americans on Monday that the U.S. banking system is safe in the wake of the collapse of Silicon Valley Bank in California and Signature Bank in New York. The federal government rushed to secure deposits at the two banks, yet there is still worry that other small regional banks may experience similar problems.
Biden said that Americans can rest assured that their deposits are safe and that his administration will do whatever is necessary. He noted that no losses will be borne by taxpayers, but instead will come from the fees that banks pay into the government’s Deposit Insurance Fund. He also pledged to ask Congress and banking regulators to strengthen the rules for banks to make it less likely that this kind of bank failure will happen again and to protect American jobs and small businesses.
SVB, the 16th-largest bank in the U.S. at the start of last week, had been operational for 40 years and was considered a reliable source of funding for tech startups and venture capital firms. It is estimated that the bank held around $209 billion in total assets. However, the company’s tipping point came when SVB announced that it had sold $21 billion worth of its securities at a roughly $1.8 billion loss and stated that it needed to raise money. This news caused a panic-induced wave of withdrawals from VCs and other depositors, and the bank’s stock plummeted by 60%.
Certain members of the Republican party alleged that Biden’s massive expenditure, measured in the trillions, had led to high inflation and caused the Federal Reserve to adopt a course of high-interest rates, which in turn made certain banks more exposed. Meanwhile, reports have indicated that SVB employees received their annual bonuses just hours before regulators seized the failing bank, and the bank’s CEO sold $3.6 million in company shares less than two weeks before SVB revealed the massive losses that prompted its collapse.
Overall, Biden was firm in his commitment to holding those responsible for this mess accountable, and he urged Americans to have confidence that their bank deposits will be there when they need them. He also promised to continue efforts to strengthen oversight and regulation of larger banks so that the U.S. is not in this position again.
0. “Biden says banking system safe after two banks fail in a matter of days” CBS News, 13 Mar. 2023, https://www.cbsnews.com/video/biden-says-banking-system-safe-after-two-banks-fail-in-a-matter-of-days/
1. “Biden stresses that Silicon Valley Bank is not getting a bailout” The Hill, 13 Mar. 2023, https://thehill.com/homenews/administration/3897534-biden-stresses-that-silicon-valley-bank-is-not-getting-a-bailout/
2. “Silicon Valley’s ‘greed and avarice’ have ‘finally come home to roost’ in SVB collapse, trader says” CNBC, 13 Mar. 2023, https://www.cnbc.com/2023/03/13/svb-collapse-silicon-valleys-greed-and-avarice-to-blame-trader-says.html
3. “Biden seeks to calm Americans after government intervenes in SVB collapse” The Washington Post, 13 Mar. 2023, https://www.washingtonpost.com/politics/2023/03/13/biden-silicon-valley-bank-federal-regulators/
4. “Biden team scrambles to assuage financial and political fears after Silicon Valley Bank failure” CNN, 13 Mar. 2023, https://www.cnn.com/2023/03/13/politics/biden-silicon-valley-bank-politics/index.html