During Monday's brief news conference at the White House, President Biden said he is seeking to hold those responsible for the bank failures and to push for better oversight and regulation of larger banks, while he also reassured the nation that “no losses would be borne by the taxpayers”.
In his address, the President stated he is attempting to dispel fears over a possible financial crisis following the swift collapse of two major United States banks. He assured customers that they are protected and that the country’s banking system is “safe”.
According to CNN, Silicon Valley Bank (SVB) was closed by US regulators on Friday after depositors rapidly withdrew their funds all at once. This bank run toppled the institution, resulting in the second largest bank failure in the country’s history, only behind the failure of Washington Mutual in 2008.
On Sunday, March 12, Signature Bank was also closed by state regulators in a collapse that stranded billions in deposits. On Monday morning, Biden told reporters that “all customers who had deposits in these banks can rest assured – rest assured – they’ll be protected and they’ll have access to their money as of today”. This includes small businesses across the US, he said.
“Americans can have confidence that the banking system is safe. Your deposits will be there when you need them,” Biden said in his March 13 statement.
Over the weekend, Biden’s economic team worked with regulators on measures which included guaranteeing deposits in both banks, setting up a new facility to give banks access to emergency funds, and making it simpler for banks to borrow from the Fed in emergencies.
“This step will ensure that the US banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth,” the agencies said in a joint statement.
During Monday’s news conference, Biden said the US government also “must reduce the risk of this happening again” and “get the full accounting of what happened”.
“I’m going to ask Congress and the 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,” he said. He also added that the managers of the banks will be fired and that investors will lose money. “They knowingly took a risk, and when the risk didn’t pay off investors lose their money,” he told reporters.