The banking system is stabilizing after decisive action by regulators, but more could be done to protect depositors if smaller banks suffer from deposit run-offs.
Treasury Secretary Janet Yellen, who speaks at an American Bankers Association conference on Tuesday, reads this in a prepared written statement released by the Treasury.
According to Yellen, the actions taken by the government in recent days to protect the uninsured deposits of two failing banks and to create new liquid Federal Reserve (Fed) funds demonstrated “a determined commitment to take the necessary steps to ensure the security of depositors’ savings and the banking system.”
Speaking just over a week after the Federal Deposit Insurance Corporation (FDIC) shut down Silicon Valley Bank and the bankrupt Signature Bank, Yellen said the ‘strong and tough’ measures had boosted public confidence. in the American banking system and protected the American economy.
“The measures we took were not aimed at helping specific banks or categories of banks. Our intervention was necessary to protect the U.S. banking system more broadly,” Yellen said in his speech. “And such actions may be justified if smaller banks are suffering from deposit flight, which (may) create the danger of the problem spreading.”
Yellen points out that the Fed’s new Term Bank Funding Facility is providing liquidity to the banking system, deposit outflows from regional banks have stabilized, and actions by the FDIC, Fed and Treasury have reduced risk. bank failures in the future.
