WASHINGTON. D.C., March 13, 2023 (UPI) — President Joe Biden said on Monday that swift action to protect deposits of two closed banks was meant to assure Americans that the U.S. banking system remained strong and head off fears that it is the beginning of other failures of financial institutions.
Biden’s morning White House briefing came as many feared that the closures of California’s Silicon Valley Bank, which handled the funds of many tech startups, and New York Signature Bank, would create a customer panic that could lead to a wave of other bank collapses.
Biden said all customers can “rest assured” that they will be able to access their funds and protected on Monday. He said the move will allow companies to make payroll, pay bills and stay open for business. The Federal Deposit Insurance Corporation normally insures deposits of up to $250,000 but the administration’s action will give that safety net to all depositors.
“Because of the actions of that, because of the action our regulators have already taken, every American should feel confident that their deposits will be there if and when they need them,” Biden said.
The president said that fees from the deposit assurances will come from fees paid by the banking industry into the federal insurance fund and not taxpayers. He added that those running failed banks will lose their jobs when they come under the control of the feds.
“The management of these banks will be fired,” Biden said. “If the bank is taken over by the FDIC, the people running the bank should not work there anymore.”
Biden said while depositors will have their funds protected, investors in the banks will not enjoy the same luxury.
“They knowingly took a risk and when the risk didn’t pay off, the investors lose their money,” Biden said. “That’s how capitalism works.”
In the meantime, Biden hinted that an investigation will follow to find out what went wrong at these institutions.
“There are important questions as to how these banks got into these circumstances in the first place,” Biden said. “We must get a full accounting into what happened,” adding those responsible “will be held accountable. No one is above the law.”
Biden touted the banking requirements put in place during the Obama administration when he served as vice president, only to see some of those regulations turned back during the Trump era.
“I will ask Congress and banking regulators to strengthen the rules of the banks to make it less likely for these bank failures from happening again,” Biden said.
Regulators shut down New York’s Signature Bank on Sunday on the heels of closing Silicon Valley Bank on Friday. Silicon Valley Bank, a tech startup lender, became the first major bank to fail in more than two years.
Market futures were mixed Monday morning before the Opening Bell, with the Dow down 0.45% with the S&P falling 0.16%. The Nasdaq futures remained up at 0.66%.
Several banks, though, took a premarket beating, including San Francisco’s First Republic Bank, which saw its futures fall 65%, followed by West Alliance’s loss of 61% and PacWest Bancorp tumbling of 24%.
