You can rest assured! US Treasury Secretary Unlike the 2008 crisis, the bank promised to protect all deposits if problems worsened.

US Treasury Secretary Janet Yellen said the American banking system “looks good,” stressing that the recent collapse of US financial institutions was “very different” to the global financial crisis of 2008.

Addressing the American Bankers Association forum on Tuesday, Yellen said the US government’s intervention in Following the collapse of Silicon Valley Bank (SVB) and Signature Bank helped prevent the impact from spreading. “The situation is stabilizing and the US banking system is good,” said the US Treasury Secretary.

The US government moved quickly in response to this crisis. It is the second largest bank failure in US history. By taking over the business of both banks and guaranteeing all deposits even with unguaranteed deposits

Yellen noted on Tuesday (Mar. 21) that the US government may proceed to insure all deposits if there is another bank collapse. “Similar measures may be justified. If smaller financial institutions have problems with people flocking to raise money that poses a risk of getting worse,” he said.

The minister continued: Washington also reduces risks to the banking system. By establishing the “Bank Term Funding Program” project to provide additional liquidity to various financial institutions. and help banks support the needs of all depositors. “Let me be clear. The government’s recent action shows our strong commitment to take the necessary measures to guarantee depositors’ deposits and that the banking system remains safe.”

US Regulatory Commission The SVB was closed on March 10 following a bank run. Providing specific loans to technology start-ups and their venture capital business that funds new businesses. the value falls amid continued interest rate hikes by the Federal Reserve (Fed).

Later, Signature Bank, headquartered in New York It is another bank that has also collapsed.

Yellen and other US officials tried to defend the government’s course of intervention. Amid public concern and disappointment about the decision. That amounts to bailing out a financial institution that critics see as collapsing. due to mismanagement

However, US President Joe Biden’s administration has insisted that their recent moves are not part of financial aid.

Echoes of the current mess Banks around the world can touch them by the end of last week The main financial institutions of the United States. promised an injection of $30 billion in the form of deposits to support the First Republic Bank, in a move welcomed by Washington.

the collapse of SVB and Signature Bank and the rise in banking stocks. Concerns arose about a widespread economic collapse similar to the one in the 2008 financial crisis, but Yellen said on Tuesday that the two situations were not the same.

“We know that the recent situation This is very different from the situation of the global financial crisis,” he said. Financial institutions are under pressure to hold subprime assets. We do not see that situation in the banking system today. In addition, our financial system is much stronger than it was 15 years ago, mainly due to post-crisis reforms that provide stronger capital measures. as well as other improvements that is important”

Two years after the 2008 financial crisis, members of the US Congress Passed extensive Wall Street reform legislation. But some regulations were rolled back in 2018 under the support of both parties.

Last week, Biden urged Congress to tighten regulations. Bring the executives of the failed financial institutions to justice for mismanagement and excessive risk taking. It included banning them from working in the industry.

(Source: Reuters)