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WASHINGTON – President Joe Biden sought to calm market and taxpayer jitters early Monday, saying Americans can have “confidence” in the banking system after the collapse of Silicon Valley Bank.
“Americans can have confidence that the banking system is safe,” Biden said at the White House. “Your deposits will be there when you need them.”
Biden said “no losses” from the collapse would be borne by taxpayers, and the money would come from the fees banks pay into the Deposit Insurance Fund.
The Federal Deposit Insurance Corporation, or FDIC, took control last week of SVB’s assets after the bank ran out of cash. Federal regulators also assessed over the weekend that Signature Bank of New York presents a systemic risk and took it over. Biden said Monday that managers of the banks would be fired and investors would not be protected.
Customers of the banks, including small businesses that need to make payroll, would have immediate access to their money, the president said.
“Every American should feel confident that their deposits will be there, if and when they need them,” Biden said.
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Stocks were mixed as the markets reacted to federal regulators’ plan and Biden’s speech.
Silicon Valley Bank’s failure is the second largest since the 2008 financial crisis and came after struggling tech companies made a run on the bank, withdrawing cash at a rapid pace and forcing the bank into a position where it had to sell bonds at a loss to cover the withdrawals.
Treasury Secretary Janet Yellen stressed Sunday that since the banking system’s failure more than a decade ago, better controls are in place, including capital and liquidity supervision.
She said on CBS’ “Face the Nation” that the system proved its “resilience” during the coronavirus pandemic, “so Americans can have confidence in the safety and soundness of our banking system.”
Biden said Monday that he will ask Congress and banking regulators to further strengthen the rules for banks to make it less likely that a similar bank failure happens again and to help project jobs and small businesses.
“We will not stop at this,” Biden said. “We will do whatever is needed.”
Francesca Chambers is a White House Correspondent for USA TODAY. Follow her on Twitter @fran_chambers.
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