Joe Biden: “The banking system of the United States is safe”

US President Joe Biden delivers a speech on the banking crisis following the failure of Silicon Valley Bank (SVB) and Signature Bank, in the Roosevelt Room of the White House in Washington, DC, USA. March 13, 2023. REUTERS/Evelyn Hockstein

President Joe Biden He told US residents on Monday that the country’s financial systems are sound, following the shocking rapid failure of two banks that raised fears of a broader upheaval.

“Americans can trust that the banking system is safe”, he said from the Roosevelt Room before a trip to the West Coast. “Your deposits will be there when they need them.”

US regulators closed the Silicon Valley Bank on Friday after it suffered a traditional bank run, in which depositors rushed to withdraw their funds all at once. It is the second largest bank failure in the history of the United States, only behind that of Washington Mutual in 2008.

As a sign of the speed with which the financial bleedingregulators announced that the SignatureBankbased in New York, had also gone bankrupt.

The president, from the Roosevelt Room shortly before the opening of the US markets, said that he would try to hold the culprits accountable and pressed for improve supervision and regulation of large banks.

“I am going to ask Congress and banking regulators to tighten the rules for banks so that this type of bank failure is more unlikely to happen again,” he said in televised remarks from the White House.

Biden He added that “the management of these banks will be fired.”

Likewise, Biden promised that no loss would be borne by taxpayers.

“The money will come from the fees that banks pay for deposit insurance,” he said.

FILE PHOTO: A closed Silicon Valley Bank office in Menlo Park, California, United States, March 10, 2023. REUTERS/Jeffrey Dastin
FILE PHOTO: A closed Silicon Valley Bank office in Menlo Park, California, United States, March 10, 2023. REUTERS/Jeffrey Dastin

The governments of USA and Britain they took extraordinary measures to avoid a potential banking crisis.

US regulators worked throughout the weekend to find a buyer for the Silicon Valley Bankwhich had more than $200 billion in assets and catered to tech start-ups, venture capital firms, and high-paid workers in the tech sector.

Although those efforts appeared to have failed, authorities assured all of the bank’s customers that they would be able to access their money on Monday.

He bank of england and the british treasure announced early Monday that they had facilitated the sale of the Silicon Valley bank’s London subsidiary to HSBCEurope’s largest bank, guaranteeing the safety of 6.7 billion pounds ($8.1 billion) in deposits.

The guarantees were part of an extensive program of emergency loans intended to prevent a wave of bank avalanches that would threaten the stability of the banking system and the economy as a whole.

The New York Stock Exchange opened lower on Monday, in a market rocked by the specter of possible contagion despite announcements of official contingency measures to guarantee deposits.

In the first exchanges, the dow jones yielded 0.59%, the technological nasdaq0.80%, and the broad S&P 500 index, 1.08%, while several regional banks collapsed.

The actions of european banks They also received harsh punishment this Monday. Credit Suisse it leads the declines with a drop that reached 14%, after several quarters of poor results, but entities considered more solid also felt the blow.

The German commerzbank plummeted 11.3%, the French general society and the Spanish Sabadell they fell 6.2% and 9.4%, respectively. Another Spaniard, the Santander lost 7.4% and the Dutchman ENG 8.3%.

He pan-European STOXX 600 index fell 2.4% and posted its biggest percentage decline since December 2022. Banks, automakers and insurers were the main bears.

Concerns were raised about the resilience of the sector’s balance sheet in the face of the collapse of SVB. However the European Central Bank (ECB) does not plan an emergency meeting of its banking supervisory board on Monday, it told Reuters a high-level source.

Meanwhile, investors now see a nearly 90% chance that the Fed will hike interest rates by 25 basis points (bps) next week, a sharp reversal from the 50bp hike they had previously priced in after the solid economic data.

Keep reading:

Start of volatile day on Wall Street amid falling bank shares
HSBC bought the bankrupt subsidiary of Silicon Valley Bank in the United Kingdom for one pound

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