Yellen Warns Congress to Pass “Clean” Debt Limit Increase and Reassures US Banking System is “Sound”

In the wake of the second and third largest banking failures in US history, Treasury Secretary Janet Yellen sought to reassure Congress Thursday that the U.S. banking system remains “sound” and that all deposits are safe.[0]

Yellen appeared before the Senate Finance Committee to discuss President Biden’s $6.9 trillion budget proposal and the steps the federal government took over the weekend to guarantee all deposits at Silicon Valley Bank and Signature Bank.[1] Yellen said that the government’s actions demonstrate its commitment to ensuring “that depositors’ savings remain safe” and allowed bank customers to make payroll and pay their bills.[2]

Senator Mike Crapo expressed his worries regarding the precedent of guaranteeing all deposits and the implications it may have on market expectations in the future.[3] Lankford inquired of Yellen as to whether the policy would mean that small banks would be less attractive to depositors who had accounts over the FDIC’s $250,000 insurance limit.[3] Companies may have more than one bank account with a value of less than $250,000; however, some may not.[4] Organizations that are non-profit or have large payrolls could have account balances exceeding the aforementioned amount.[4]

Inflation, Yellen noted, is the Biden administration’s principal economic worry despite the modest decreases it has seen over time.[5] The 6% rate in February remains significantly higher than the Federal Reserve’s desired 2%.[5]

The Republican Party has declared that they will exploit the necessity to increase the debt ceiling to further their agenda of drastically cutting back on federal spending.[6] It appears that Republican lawmakers are firmly committed to their game of debt-limit chicken with the White House, as evidenced by the fact that they are discussing contingency plans, even though they have not laid out a specific budget plan.[6]

Yellen urged Congress to pass a “clean” debt limit increase and expressed her concerns about a plan proposed by House Republicans, which would order the Treasury to prioritize payments on government debt and Social Security should the U.S. reach its debt maximum.[7] The measure has been rejected by Democrats.[7]

In conclusion, Yellen expressed her confidence in the US banking system and urged Congress to pass a “clean” debt limit increase. She also warned of the dangers of the proposed GOP plan, reiterating the administration’s stance for a “responsible fiscal path”.

0. “Yellen Says U.S. Banking System Is ‘Sound’ as Regionals Selloff Continues” Barron’s, 16 Mar. 2023,

1. “Rep Roy hints at defunding Treasury secretary after she refused to negotiate with GOP on debt ceiling” Fox News, 17 Mar. 2023,

2. “US banking system is sound, insists Janet Yellen” The Times, 17 Mar. 2023,

3. “Treasury Secretary Yellen says not all uninsured deposits will be protected in future bank failures” CNBC, 16 Mar. 2023,

4. “Janet Yellen Addresses Tough Reality of Americans’ Money Amid Bank Panic” Newsweek, 16 Mar. 2023,

5. “Treasury Secretary Yellen seeks to soothe markets and depositors, saying U.S. banking system ‘remains sound’” NBC News, 16 Mar. 2023,

6. “Yellen Trashes GOP Plan to Prioritize Debt Payments” Yahoo Sports, 16 Mar. 2023,

7. “Janet Yellen Trashes GOP Debt Ceiling Plan as “Recipe for Economic and Financial Catastrophe”” The New Republic, 14 Mar. 2023,