President Joe Biden told U.S. residents on Monday that the country’s financial systems are sound, following the shocking rapid failure of two banks that raised fears of broader upheaval.
“Americans can trust that the banking system is secure,” he said from the Roosevelt Room before a trip to the West Coast. “Your deposits will be there when you need them.”
US regulators shuttered Silicon Valley Bank on Friday after it suffered a traditional bank run, in which depositors rushed to withdraw their funds all at once. It is the second largest bank failure in US history, behind only Washington Mutual in 2008.
In a sign of how quickly the financial hemorrhaging was taking place, regulators announced that the New York-based Signature Bank had also failed.
The president, speaking from the Roosevelt Room shortly before the opening of the US markets, said he would try to hold the culprits accountable and pushed for better supervision and regulation of the big banks.
“I am going to ask Congress and banking regulators to tighten the rules for banks so that this type of bank failure is more unlikely to happen again,” he said in televised remarks from the White House.
Biden added that “the management of these banks will be fired.”
Likewise, Biden promised that no loss would be borne by taxpayers.
“The money will come from the fees that banks pay for deposit insurance,” he said.
The governments of the United States and Great Britain took extraordinary measures to avoid a possible banking crisis.
US regulators worked through the weekend to find a buyer for Silicon Valley Bank, which had more than $200 billion in assets and supplied tech start-ups, venture capital firms and well-off workers. paid in the technology sector.
Although those efforts appeared to have failed, authorities assured all of the bank’s customers that they would be able to access their money on Monday.
The Bank of England and Britain’s Treasury said early Monday that they had facilitated the sale of the Silicon Valley bank’s London subsidiary to HSBC, Europe’s biggest bank, guaranteeing the safety of 6.7 billion pounds ($8.1 billion). in deposits.
The guarantees were part of a vast emergency lending program designed to prevent a wave of bank runs that would threaten the stability of the banking system and the economy as a whole.
Volatile wall street
The New York Stock Exchange opened lower on Monday, in a market rocked by the specter of possible contagion despite announcements of official contingency measures to guarantee deposits.
In early trading, the Dow Jones lost 0.59%, the technology-heavy Nasdaq 0.80% and the broad S&P 500 index 1.08% as several regional banks tumbled.
European banks with large losses
European bank shares were also hit hard on Monday. Credit Suisse led the declines with a slump of 14%, after several quarters of poor results, but entities considered more solid also felt the blow.
