US President Joe Biden said in televised remarks on Monday that America’s banking system is safe, adding that customers would have access to their money starting the same day.
“Americans can have confidence that the banking system is safe,” Biden said. “Your deposits will be there when you need them.
“Small businesses across the country with deposit accounts at these banks can breathe easier knowing they’ll be able to pay their workers and pay their bills.
“Their hardworking employees can breathe easier as well.”
Biden’s contention follows the failure this weekend of two banks – Silicon Valley Bank (SVB) and Signature Bank – which rocked the financial system across the country and beyond.
On Sunday, federal regulators took the rare step of announcing emergency measures to guarantee that all depositors at SVB would be able to access their money despite the bank’s failure, instead of the FDIC maximum $250,000 coverage for deposits.
“All customers who had deposits in these banks can rest assured they’ll be protected and they’ll have access to their money as of today,” Biden said.
“No losses will be borne by the taxpayers. Instead, the money will come from the fees that banks pay into the deposit insurance fund.”
Federal regulators said losses to the Federal Deposit Insurance Corporation would be covered by a special assessment on banks, emphasizing there would be no loss to US taxpayers.
The federal regulators were able to make such a guarantee because they designated SVB and Signature Bank as a ‘systemic risk’ to the financial system, which provides a greater flexibility to guarantee uninsured deposits, according to The Wall Street Journal.
The bank management, said Biden, will take the heat for the failures.
“The management of these banks will be fired,” Biden declared. “If the bank is taken over by FDIC, the people running the bank should not work there anymore.
“Investors in the bank will not be protected,” the president noted. “They knowingly took a risk, and when the risk didn’t pay off, investors lose their money. That’s how capitalism works.
“There are important questions about how these banks got into these circumstances in the first place. We must get a full accounting of what happened and why. Those responsible can be held accountable,” he said. No one is above the law.”
The president then made an effort to shift the blame for the crisis on to the previous administration of then-President Donald Trump.
“Finally, we must reduce the risk of this happening again,” Biden added, noting that “during the Obama-Biden administration, we put in place tough requirements on banks like Silicon Valley Bank and Signature Bank . . . to make sure the crisis we saw in 2008 would not happen again.
“Unfortunately, the last administration rolled back some of these requirements. I’m going to ask Congress and the banking regulators to strengthen the rules for banks to make it less likely this kind of bank failure would happen again and to protect American jobs and small businesses,” he promised.