None of the losses from bank failures will burden taxpayers; instead the funds will come from bank fees, US President Joe Biden said on Monday, following the collapse of two major banks of US, Signature Bank and Silicon Valley Bank. He said that Americans can have the 'confidence that their banking system is safe'.
"All customers who have deposits to these banks can rest assured they will be protected and will have access to money as of today, that includes small businesses across the country that bank payers and need to make payroll, pay the bills and stay open for business...Your deposits will be there when you need them."
"No losses will be borne by the tax payers, instead the money will come from the fees the banks pay under the deposit and insurance fund, because of the actions the regulators have already taken every American should be confident that their money is safe, the deposits that are already there if and when they need them," Biden said, while delivering remarks on US economy.
Hitting out at the people involved in the management, Biden said that action will be taken against the management of these banks. "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, they knowingly take the risk, and when the risk did not pay off, they lose the money . That's how capitalism works," he said.
"We must get the full accountability for what happened and why those responsible can be held accountable. No one is above the law," Biden added.
He said that his government took immediate action and control of Silicon Valley and Signature bank assets, and that he was going to call on Congress and regulators to 'strengthen rules' on banks after failures.
"The crisis we saw in 2004 would not happen again. We must reduce the risk of what happened," Biden said.
This comes after the collapse of Signature Bank, which was closed by New York state financial regulators on Sunday, making it the third-largest failure in U.S. history. It came just 48 hours after the SVB Financial Group’s Silicon Valley Bank collapse last week.
Signature Bank, a New York state-chartered commercial bank that’s FDIC-insured, had total assets of about $110.36 billion and total deposits of roughly $88.59 billion as of December 31, the New York Department of Financial Services said in a separate statement.
Silicon Valley Bank abruptly became the biggest US lender to fail in more than a decade on Friday, unraveling in less than 48 hours after outlining a plan to shore up capital. The bank took a huge loss on sales of its securities amid rising interest rates, spooking investors and depositors who rapidly began pulling their money. On Thursday alone, investors and depositors tried to yank about $42 billion.
Also Read: Regulators close New York's Signature Bank, marking third-largest bank failure in US history
(Edited by : Pradeep John)
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