Treasury Secretary Janet Yellen Reassures Congress that the U.S. Banking System is Sound
Treasury Secretary Janet Yellen sought to reassure Congress Thursday that the U.S. banking system remained “sound” after a week of market tumult, despite two US bank failures over the past week.[0] Speaking before the Senate Finance Committee, Yellen touted the government's “decisive and forceful actions to strengthen public confidence in our banking system” after Silicon Valley Bank abruptly failed nearly one week ago and was taken over by the Federal Deposit Insurance Corporation (FDIC).[1]
She stated that uninsured deposits would only be safeguarded if it were to result in “systemic risk and considerable economic and financial effects.”[2] Senator James Lankford of Oklahoma, a Republican, asked Yellen about the extent to which the uninsured deposit protection will be available in the banking sector.[3]
The government response also included the injection of $30 billion into First Republic Bank by 11 large U.S. banks, as customers yanked their money following the collapse of Silicon Valley Bank (SVB) and fears that First Republic could be next.[4]
Yellen also said that no taxpayer money is being used or put at risk with this action.[5] The Deposit Insurance Fund, which is financed by levies on financial institutions, offers protection for deposits.[6]
Ron Wyden, a Democrat from Oregon, is the Chair[7], said “one of the most important steps that Congress can take now is to make sure there are no questions about the full faith and credit of the United States. That means paying the bills incurred by presidents of both parties and taking a default off the table.”[6]
Yellen echoed that sentiment, saying that Mr. Biden is prepared to discuss limits on government spending but emphasized that negotiations over spending cuts should be separate from the debt limit fight.[6] “Raising the debt ceiling cannot be a condition,” she stated.[7] It is absolutely essential that the debt ceiling be increased.[7]
0. “Yellen tells Congress that U.S. banking system is “sound”” Axios, 16 Mar. 2023, https://www.axios.com/2023/03/16/yellen-congress-us-banking-system
1. “Treasury boss Yellen says US banking system ‘remains sound'” New York Post , 16 Mar. 2023, https://nypost.com/2023/03/16/treasury-sec-yellen-to-say-us-banking-system-remains-sound-on-capitol-hill/
2. “Janet Yellen Addresses Tough Reality of Americans' Money Amid Bank Panic” Newsweek, 16 Mar. 2023, https://www.newsweek.com/janet-yellen-addresses-tough-reality-americans-money-amid-bank-panic-1788353
3. “Treasury Secretary Yellen says not all uninsured deposits will be protected in future bank failures” CNBC, 16 Mar. 2023, https://www.cnbc.com/2023/03/16/svb-signature-bank-failures-yellen-says-us-banking-system-is-stable-and-deposits-remain-safe.html
4. “Why Is Credit Suisse in Trouble? The Banking Turmoil Explained” The Wall Street Journal, 16 Mar. 2023, https://www.wsj.com/articles/why-is-credit-suisse-in-trouble-the-banking-turmoil-explained-6f8ddb5b
5. “Yellen seeks to reassure US legislators after bank collapse” Al Jazeera English, 16 Mar. 2023, https://www.aljazeera.com/news/2023/3/16/yellen-seeks-to-reassure-us-legislators-after-bank-collapse
6. “Treasury Secretary Janet Yellen tells Senate panel nation's “banking system is sound” after Silicon Valley Bank collapse” CBS News, 16 Mar. 2023, https://www.cbsnews.com/news/janet-yellen-congressional-testimony-today-banking-system-remains-sound-silicon-valley-bank-signature-bank-collapse/
7. “Yellen: Debt limit breach would be ‘devastating' for banks” Roll Call , 16 Mar. 2023, https://www.rollcall.com/2023/03/16/yellen-debt-limit-breach-would-be-devastating-for-banks/
