No worries. The US Treasury seeks reassurance on the situation of the banking sector after the bankruptcy of Silicon Valley Bank (SVB) and Signature Bank. “The situation is stabilizing. And the American banking system remains solid,” US Treasury Secretary Janet Yellen said on Tuesday in front of an audience of bankers, according to excerpts from her speech at the annual meeting of the American Bankers Organization (ABA) in Washington.
The system put in place by the American central bank (Fed) to lend money to banks for a week, in order to avoid their debacle, so that those already existing, “work as planned to provide liquidity to the banking system” and “the withdrawals of money from regional banks have stabilized”, underlined the Minister of Economy and Finance of Joe Biden.
“necessary” action
Waves of massive withdrawals caused less than two weeks ago the liquidation of Silvergate Bank, a small regional bank that had become the favorite destination of the cryptocurrency community, then of SVB, including the Deposit Guarantee Agency ( FIDC) took control. And Signature Bank, the 21st bank in the country, had been closed automatically. The American authorities had immediately announced a series of measures to reassure individuals and companies with regard to the solidity of the American banking system, promising in particular that customers of SVB and Signature Bank will be able to withdraw all of their deposits.
“Our intervention was necessary to protect the entire US banking system. And similar actions could be warranted if smaller institutions experience withdrawal rushes that pose a risk of contagion,” the minister is further expected to indicate. The First Republic bank is particularly in the hot seat.
The Fed, for its part, indicated on Thursday that it had lent nearly $12 billion to American banks in a few days, as part of the system put in place on March 12, intended to allow them to honor withdrawal requests from their customers. It had also, via its usual program of very short-term loans, lent 152 billion dollars to the banks during the past week against barely 5 billion the previous week, and 142.8 billion dollars to the two entities created by the US regulators to succeed SVB and Signature Bank.