US President Joe Biden said Monday that Americans are able to maintain their confidence in the US banking system after outages and fears of a global domino effect from the collapse of the Silicon Valley bank, the AP news agency reported.
President Biden said, “You can have confidence that the banking system is safe. Your deposits are there when you need them.” “No losses will be borne by the taxpayers. Let me repeat that. No losses will be borne by the taxpayers,” he was quoted as saying by the New York Times.
In a five-minute speech, Biden highlighted four points: avoid panic, no taxpayer-fund bailouts, proper accountability, and taking action to avoid such a situation in the future. He also called on Congress and regulators to tighten rules for banks after bankruptcies.
US Treasury Secretary Janet Yellen had also previously said the government would not bail out the Silicon Valley Bank (SVB) following its shutdown by regulators last Friday. Yellen said that after the 2008 financial crisis, several reforms were introduced with the sole aim of avoiding government bailouts.
Asked whether the US government would intervene in emergency measures to address the problems of the SVB collapse, particularly with regard to bailouts, Yellen replied: “America’s economy relies on a safe and sound banking system that can provide for the credit needs of our households and businesses. So whenever a bank, especially one like Silicon Valley Bank with billions of dollars in deposits fails, it’s clearly a concern.”
Earlier, the US government had said that SVB depositors “will have access to all of their money starting Monday (March 13)”. It said that taxpayers won’t be responsible for any losses associated with SVB’s resolution.
Silicon Valley Bank (SVB), a major US lender to venture capital-backed companies, was seized by California banking regulators on Friday. The Federal Deposit Insurance Corporation (FDIC) said in its order the measure was designed to “protect insured depositors”.
The closure of SVB is considered the biggest bank failure since Washington Mutual at the height of the 2008 financial crisis. The bank failed after depositors, mostly tech workers and venture capital-backed companies began withdrawing their money from the bank.
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