Biden to defend US banking system after SVB, Signature collapse
Send a link to a friend
[March 13, 2023]
By Simon Lewis
WASHINGTON (Reuters) - President Joe Biden will on Monday address a
banking crisis that led U.S. regulators to step in with a series of
emergency measures after the collapses of Silicon Valley Bank and
Signature Bank threatened to trigger a broader systemic crisis.
Biden on Sunday hinted at new regulation of big banks after the biggest
U.S. bank failure since the 2008 financial crisis, but faces a divided
Congress unlikely to approve tougher new rules.
His economic team worked with regulators over the weekend on the
measures, which included guaranteeing deposits in both banks, setting up
a new facility to give banks access to emergency funds and making it
easier for banks to borrow from the Federal Reserve in emergencies.
The moves sent waves of relief through Silicon Valley and made stock
futures rally, but the crisis is testing confidence in the U.S.
financial system and fears remained the fallout would roil global
markets in the week to come.
"The American people and American businesses can have confidence that
their bank deposits will be there when they need them," Biden said in a
statement.
![](http://archives.lincolndailynews.com/2015/May/02/images/ads/current/guzzardo_lda022609.png)
Biden would give remarks on Monday morning on additional plans to keep
the economy on track amid a crisis sparked by the sudden collapse of
Silicon Valley Bank (SVB) last week, he added.
"I am firmly committed to holding those responsible for this mess fully
accountable and to continuing our efforts to strengthen oversight and
regulation of larger banks so that we are not in this position again,"
Biden said.
Rules introduced after U.S. banks sparked a global financial crisis in
2008 by aggressive mortgage lending may come under the spotlight in
coming days. They were partially repealed in 2018 under former President
Donald Trump.
[to top of second column]
|
![](../images/031323PIX/news_j83.jpg)
U.S. President Joe Biden delivers
remarks about his budget for fiscal year 2024 at the Finishing
Trades Institute in Philadelphia, Pennsylvania, U.S., March 9, 2023.
REUTERS/Evelyn Hockstein
![](http://archives.lincolndailynews.com/2023/Mar/13/images/ads/current/graue_lda_preowned_Buickencore_011323.jpg)
The changes to the Dodd-Frank Act pushed by Republicans raised the
threshold at which banks are considered systemically risky and
subject to stricter oversight to $250 billion from $50 billion.
Silicon Valley bank had $209 billion in assets at the end of last
year.
Democrat Biden faces a divided Congress after Republicans took
control of the House of Representatives in January, and new U.S.
bank regulations could be difficult.
"The prospect of legislation in this polarized political world is
very low," John Coffee, a professor at Columbia Law School, told
Reuters.
"The real problem here is that banks that are holding illiquid loans
or securities on a hold-to-maturity basis do not have to mark them
down even though they have a market value well below their
balance-sheet value. But when (SVB) sold some of these and revealed
their loss, they created some panic."
Senator Tim Scott, a Republican from South Carolina who sits on the
Senate's banking, housing and urban affairs committee, said it was
important to bring markets to a "calm and orderly resolution," but
warned against too much intervention.
"Building a culture of government intervention does nothing to stop
future institutions from relying on the government to swoop in after
taking excessive risks," Scott said in a statement, adding he was
committed to bringing accountability for the crisis.
"We deserve to know what exactly happened and why,” Scott said.
(Reporting by Simon Lewis; Editing by Heather Timmons and Stephen
Coates)
[© 2023 Thomson Reuters. All rights
reserved.]This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content. |