Over two weeks after the failure of three US banks – Silicon Valley Bank (SVB), Silvergate, and Signature – Treasury Secretary Janet Yellen stated that the federal government is prepared to intervene if necessary. Yellen backed the federal government’s efforts to restore the financial sector in the United States. She stated that recent actions to safeguard depositors at two banks were taken to keep issues from spreading throughout the financial industry.
“Our intervention was necessary to protect the broader US banking system, and similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion.”
Yellen is scheduled to defend the government’s recent moves to safeguard the banks and the broader financial implications of the situation, calling them “decisive and forceful actions.” Yellen also attempted to reassure the public that America’s banks, whose stocks have been extremely volatile in recent days, are “sound” and that client accounts are safe when she spoke before the Senate Finance Committee.
The health of the small and regional banks was also addressed by her saying small and mid-size lenders continue to play an important role in the US economy, thanks to government intervention. “The Treasury is committed to ensuring the ongoing health and competitiveness of our vibrant community and regional banking institutions.”
Ms Yellen’s remarks were her first since the Treasury Secretary and other federal authorities attempted to mitigate the consequences of Silicon Valley Bank’s failure. The Federal Reserve, the Treasury Department, and the Federal Deposit Insurance Corporation declared on Sunday that they will ensure that all depositors at Silicon Valley Bank and Signature Bank, which were also seized by authorities, have been fully compensated.
it was also indicated that the United States was not taking a step in the path of nationalising the banking sector. Although there have been indications that all of the nation’s deposits are effectively protected rather than simply those up to $250,000
Both the Department of Justice and the Securities and Exchange Commission are allegedly investigating the event. Meanwhile, analysts have determined that over 186 banks in the United States are in danger of failing. Congress has called a conference for March 29 to investigate the failures of SVB and Signature Bank.