U.S. Treasury Secretary Janet Yellen says the federal government could ensure all deposits of smaller banks if they “suffer deposit runs that pose the risk of contagion.” The federal government just recently safeguarded all deposits of Silicon Valley Bank and Signature Bank after they stopped working.
U.S. Government Ready to Guarantee More Deposits if Needed
U.S. Treasury Secretary Janet Yellen stated in a speech to the American Bankers Association Tuesday that the federal government is prepared to offer extra deposit warranties if the banking crisis worsens.
Following the failures of a number of significant banks, consisting of Silicon Valley Bank and Signature Bank, the federal government actioned in and ensured all deposits of the 2 stopped working banks beyond the typical $250,000 Federal Deposit Insurance Corporation (FDIC) protection limitation. The previous Federal Reserve chair discussed:
The actions we took were not concentrated on assisting particular banks or classes of banks. Our intervention was essential to secure the more comprehensive U.S. banking system. And comparable actions could be called for if smaller organizations suffer deposit runs that posture the threat of contagion.
“The situation is stabilizing. And the U.S. banking system remains sound,” Yellen firmly insisted.
Nonetheless, Treasury Department personnel are apparently checking out methods to momentarily broaden FDIC insurance protection to all deposits, Bloomberg reported Monday.
Last week, the Mid-Size Bank Coalition of America asked federal regulators to extend FDIC insurance coverage to all deposits for the next 2 years. “It is imperative we restore confidence among depositors before another bank fails, avoiding panic and a further crisis,” the group stated. In addition, U.S. Congressman Blaine Luetkemeyer has actually prompted the federal government to momentarily guarantee every bank deposit in the nation to prevent work on smaller banks.
However, Yellen dismissed recently the concept of the federal government offering warranties for all deposits in case of future bank failures.
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