by Jason Cohen
Treasury Secretary Janet Yellen said in remarks Tuesday that regulators may ensure all deposits at more banks following the Silicon Valley Bank (SVB) and Signature Bank depositor bailouts.
Yellen said the bailouts were essential to safeguard the U.S. banking system in prepared remarks at the American Bankers Association Tuesday, referencing the Federal Reserve’s actions in insuring the deposits of SVB’s customers.
“Similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion,” she said.
Previously, Yellen had said similar actions would only take place for banks whose failure could pose a threat to the banking system.
“A bank only gets that treatment if a majority of the FDIC board, a super majority of the Fed board and I, in consultation with the president, determine that the failure to protect uninsured depositors would create systemic risk and significant economic and financial consequences,” Yellen said.
“Treasury is committed to ensuring the ongoing health and competitiveness of our vibrant community and regional banking institutions,” Yellen said, according to CNBC.
U.S. officials are examining possible methods to increase Federal Deposit Insurance Corp. (FDIC) coverage to more deposits as a way to stave off a possible financial crisis, according to Bloomberg.
Staff in the Treasury Department are evaluating if federal regulators possess sufficient emergency authority to temporarily insure all deposits over the $250,000 limit existing on most accounts, following the steps taken to cover SVB and Signature Bank depositors, according to Bloomberg.
As of now, authorities do not believe this move is essential, but they are working on a strategy in case circumstances devolve, according to Bloomberg.
“Since our administration and the regulators took decisive action last weekend, we have seen deposits stabilize at regional banks throughout the country and, in some cases, outflows have modestly reversed,” White House spokesman Michael Kikukawa said, not acknowledging if this step is being investigated, according to Bloomberg.
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Jason Cohen is a reporter at Daily Caller News Foundation.
Photo “Janet Yellen” by Janet Yellen. Background Photo “Silicon Valley Bank” by Tony Webster. CC BY 2.0.
