< /p> A branch of US Silicon Valley Bank in Santa Clara, California, on March 10, 2023.
Washington – The American banking system is safe and the government will do everything to protect savers, President Joe Biden assured today. He commented on the situation in the banking sector in connection with the collapse of financial houses Silicon Valley Bank (SVB) and Signature Bank. The president said he would ask Congress and regulators to strengthen banking rules, according to media reports. Before trading on US stock markets opened, he added that he would do whatever it takes to strengthen the sector.
“Americans can trust that the banking system is safe,” Biden said. “Your deposits will be there when you need them,” he added. According to him, the same applies to small businesses.
The American president repeated that he does not intend to use taxpayers' money to solve the situation. But the government will not protect investors because, according to him, no one is above the law. The managers of the two banks that came under state control will be fired.
“They knowingly took a risk, and when the risk didn't pay off … they lose money. That's how capitalism works,” Biden said.
US authorities shut down the New York financial institution Signature Bank. The decision follows the closing of SVB's branches on Friday, marking the biggest fall for a bank in the US since the collapse of Washington Mutual in 2008.
The Federal Deposit Insurance Corporation (FDIC) took control of Signature Bank. All savers will get their money back and taxpayers will bear no recovery costs, the US Treasury Department said in a joint statement with the Federal Reserve and the FDIC.
“I will ask Congress and banking regulators to strengthen rules for banks , to make it less likely that these kinds of bank failures will happen again and to protect American jobs,” Biden said. The president faces a divided Congress, which could make it more difficult to pass tougher rules. But Republicans and Democrats have criticized Silicon Valley bank managers, Reuters reported.
Meanwhile, US bank stocks continue to weaken. Shares of the First Republic bank from San Francisco lost about 65 percent at the beginning of today's trading, having already written off about 33 percent last week. Shares of Bank of America, the second largest bank in the US, were down about four percent, while financial services provider Charles Schwab lost about eight percent.
The main stock indexes in Europe are losing about two to three percent. Bank shares also recorded a sharp decline.