President Biden says Americans should “feel confident” in their banking system after his administration’s response to the collapse of Silicon Valley Bank (SVB) and Signature Bank last week.
Biden reiterated a statement from the FDIC and Treasury Department during public remarks Monday morning, telling reporters that the federal government would guarantee depositors at the banks access to their funds. He added that no such protection is being offered to the banks’ investors, however. His administration has also fired the leadership at both banks.
“No losses will be borne by the taxpayers,” Biden emphasized. “Instead, the money will come from the fees that banks pay into the deposit insurance fund. Because of the actions that our regulators have already taken, every American should feel confident that their deposits will be there if and when they need them.”
Biden went on to call on Congress to pass legislation to “strengthen rules” on banks to prevent failures like SVB and Signature.
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The Santa Clara, California-based band collapsed last week and is now under the control of federal regulators. The SVB had been the 16th-largest bank in the U.S. prior to the bank run that led to its downfall.
Anxious depositors rushed to withdraw their money over concern for the bank’s health, causing its collapse, which may serve as “an extinction-level event for startups,” according to Y Combinator CEO Garry Tan.
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The Biden administration had earlier assured SVB depositors that they would have access to all of their funds on Sunday. The joint statement from the Treasury Department, Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) also emphasized that the action would come at no cost to US taxpayers.
“Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system,” the joint statement said. “This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth.”
Biden delivered his Monday remarks in a short briefing before traveling to California, where he is set to announce the sale of nuclear submarines to Australia.