West News Wire: President Joe Biden stated on Friday that the country still needed some time to address the current issues at financial institutions. He added that the American banking sector was not going to blow up.
With the government devoting its entire effort to minimizing the repercussions from the recent run of bank failures, Biden stated that US lenders were in rather good health.
He acknowledged that it would take some time for things to settle down, but he refuted the notion that what happened in the US directly led to the rescue of Credit Suisse by fellow European behemoth UBS.
We did pretty darn good, in my opinion. Savings are safe, he assured reporters during a press conference in Ottawa, the capital of Canada. “I think it’s going to take a little while for things to just calm down, but I don’t see anything that’s on the horizon that’s about to explode.”
Earlier this month, regulators shuttered Silicon Valley Bank (SVB), the country’s 16th biggest lender, in what would become the largest US bank failure since the 2008 financial crisis and the second-largest bank failure in US history. The third-largest came just days later when Signature Bank ceased operations.
The US Federal Reserve has meanwhile announced a new Bank Term Funding Program that will offer loans of up to a year to shore up confidence in the banking system and protect depositors at failing banks. Under the new scheme, both insured and uninsured depositors will get full access to their money through a special fund of the Federal Deposit Insurance Corporation (FDIC). The regulator has also eased the terms of banks’ access to its discount window.
According to Biden, in the event other American lenders fail, federal deposit insurance could be tapped for deposits above $250,000.
“If we find that there’s more instability than appears, we’d be in a position to have the FDIC use the power it has to guarantee those loans above $250,000 like they did already,” he said.
