President Joe Biden on Monday told Americans the nation’s financial systems were safe, seeking to project calm following the swift and stunning collapse of two banks that prompted fears of a broader upheaval.
“Your deposits will be there when you need them,” he said.
U.S. regulators closed the Silicon Valley Bank on Friday after it experienced a traditional bank run, where depositors rushed to withdraw their funds all at once. It is the second largest bank failure in U.S. history, behind only the 2008 failure of Washington Mutual. But the financial bloodletting was swift; New York-based Signature Bank also failed.
The president, speaking from the White House shortly before a trip to the West Coast, said he’d seek to hold those responsible accountable, and pressed for better oversight and regulation of larger banks. And he promised no losses would be borne by taxpayers.
“We must get the full accounting of what happened,” he said. “Americans can have confidence that the banking system is safe.”
Biden also said management of the banks should be fired. “If the bank is taken over by the FDIC, the people running the bank should not work there anymore,” he said, referring to the Federal Deposit Insurance Corp., the agency responsible for ensuring the stability of the banking system.
At more than $110 billion in assets, Signature Bank is the third-largest bank failure in U.S. history. Another beleaguered bank, First Republic Bank, announced Sunday that it had bolstered its financial health by gaining access to funding from the Fed and JPMorgan Chase.
The developments left markets jittery as trading began Monday. The Asian and European markets fell but not dramatically, and U.S. futures were down.
In an effort to shore up confidence in the banking system, the Treasury Department, Federal Reserve and FDIC said Sunday that all Silicon Valley Bank clients would be protected and able to access their money.
“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,” the agencies said in a joint statement.
Under the plan, depositors at Silicon Valley Bank and Signature Bank, including those whose holdings exceed the $250,000 insurance limit, will be able to access their money on Monday.
Britain also moved quickly, working throughout the weekend to arrange the sale of Silicon Valley Bank UK Ltd., the California bank’s British arm, for the nominal sum of one pound
While the bank is small, with less than 0.2% of U.K. bank deposits according to central bank statistics, it had a large role in financing technology and biotech startups that the British government is counting on to fuel economic growth.
Jeremy Hunt, Britain’s Treasury chief, said some of the country’s leading tech companies could have been “wiped out.”
“When you have very young companies, very promising companies, they’re also fragile,” Hunt told reporters, explaining the why authorities moved so quickly. “They need to pay their staff and they were worried that as of 8 a.m. this morning, they might literally not be able to access their bank account.”
He stressed that there was never a “systemic risk” to Britain’s banking system.
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