Joe Biden reassured Americans today that the banking system is “safe” and explained his administration’s effort to protect small businesses and taxpayers in remarks made immediately following the regulatory seizure of two separate banks in one week.
Fears over the stability of the banking system began after both Silicon Valley Bank and Signature Bank were shut down by regulators.
“Americans can rest assured that our banking system is safe. Your deposits are safe,” Biden said during a 7 minute set of remarks in the Roosevelt room. “Let me also assure you we will not stop at this. We will do whatever is needed on top of all this.”
While deposits were previously insured up to $250,000, the Biden administration and the Federal Reserve have announced a plan to create new money to refund deposits to the Silicon Valley startups and tech companies impacted by the bank closures.
According to CNN, the actions set to be taken by the Biden administration include “backstopping depositors’ funds, making sure taxpayers are not on the hook for these moves, holding those responsible accountable and declining to extend relief to investors of Silicon Valley Bank.”
“Management of these banks will be fired. If the bank is taken over by FDIC, the people running the bank should not work there anymore,” Biden said, adding that investors would “not be protected” because they knew the risk.
Biden refused to take any questions from reporters at the White House following his 7 minute statement.
Despite Biden’s assurances, financial institutions appear to be down across the board today on the stock market.
Separate reports revealed on Monday that major U.S. bank stocks, including Western Alliance Bancorporation, First Republic Bank, PacWest Bancorp, and Charles Schwab, dropped significantly in pre-market trade hours.
The sudden end of Silicon Valley Bank and Signature Bank marks the biggest bank failure since the 2008 financial crisis, with even some left wing media outlets reporting that the event has “echoes of 2008,” Valiant News reported.
Some in the finance sector believe the Federal Reserve is responsible for the collapse due to their decision to cut interest rates to zero, then rapidly increase them to fight the inflation crisis.
“The #Fed is once again responsible for another financial crisis, but it’s not the interest rate hikes, but the prior rate cuts that are to blame. As I said from the beginning when the Fed cut rates to zero it made a deal with the devil. The devil finally showed up to collect,” tweeted financial expert Peter Schiff.
“The government blames #SVB’s failure on management’s foolish decision to load up on long-term U.S. Treasuries and MBS. But government banking regulations encouraged those purchases with favorable accounting terms; no haircuts or mark-to-market, despite high interest rate risk,” Schiff added in a separate tweet.
This news and commentary by Andrew White originally appeared on Valiant News.