The U.S. banking system remains resilient and Americans can be confident their deposits will be available when needed, thanks to decisive action taken after Silicon Valley Bank’s inability to withstand an influx of depositors led to its collapse the last week, Treasury Secretary Janet Yellen said Thursday. .
Speaking before the Senate Treasury Committee, Yellen said the Treasury and other financial regulators took emergency action on Sunday to bolster public confidence in the banking system.
“I can assure committee members that our banking system is sound and Americans can be confident that their deposits will be safe and sound,” Yellen said, addressing lawmakers. “The actions taken this week demonstrate our strong commitment to protecting savers’ savings.”
The comments marked Yellen’s first speech to Congress since emergency measures passed over the weekend to support depositors and boost liquidity in the banking sector.
Yellen said Silicon Valley Bank’s collapse was caused by the bank’s inability to respond to depositors’ attempts to withdraw money from accounts after the Federal Reserve’s interest rate hikes ( Fed) over the past year have reduced the cost of investing in bonds used to fund depositor withdrawals. . She also cited the high level of uninsured deposits at Silicon Valley Bank as an aggravating factor.
Yellen said that the Treasury, along with the Fed and the Federal Deposit Insurance Corporation (FDIC), have developed measures to protect all depositors of the two banks (the second bank to fail was Signature Bank – ed.), creating a new mechanism allowing banks to access funds in case of emergency. The Fed has also made it easier for banks to borrow in an emergency.
“It is important to note that no taxpayer dollars are being used or put at risk in these actions,” Janet Yellen said.
