WASHINGTON: President Joe Biden declared the US banking system “safe” and vowed stiffer bank regulation, after US regulators were forced to step in with a series of emergency measures after Silicon Valley Bank and Signature Bank collapse, threatening to trigger a broader crisis.
“Americans can have confidence that the banking system is safe. Your deposits will be there when you need them,” Biden said.
The managers of the banks will be fired, Biden noted, and investors will lose money. “They knowingly took a risk, and when the risk didn’t pay off his adjusters lose their money. That’s how capitalism works,” he said.
Biden also promised new regulation after the biggest US bank failure since the 2008 financial crisis. Some of the Dodd Frank law passed after that crisis to prevent a repeat was rolled back by Republicans under former president Donald Trump, he noted.
“I’m going to ask Congress and the banking regulators to strengthen the rules for banks to make it less likely this kind of bank failure will happen again, and to protect American jobs as a small business,” he said. Biden faces a divided Congress, which could make passing tougher new rules difficult. However, Republicans and Democrats alike have criticised Silicon Valley’s bank managers.
His economic team worked with regulators over the weekend on the measures, which included guaranteeing deposits in both banks, setting up a new facility to give banks access to emergency funds and making it easier for banks to borrow from the Federal Reserve in emergencies.
