- Treasury Secretary Janet Yellen provided reassurances about the stability of the U.S. banking system in testimony before a Senate Finance Committee.
- Yellen stood by the decision to protect uninsured deposits of over $250,000, citing the need to prevent additional withdrawals that could exacerbate the crisis.
- She also said that regulators should review what went wrong at Silicon Valley Bank and Signature Bank to ensure adequate oversight of financial institutions.
U.S. Treasury Secretary Janet Yellen told a Senate Finance Committee hearing that the nation's banking system "remains sound" after the collapse of Silicon Valley Bank and Signature Bank.
Yellen testified that the government took "decisive and forceful actions" to protect depositors in those two banks and gave additional support to financial institutions through a new lending facility from the Federal Reserve. She said "Americans can feel confident that their deposits will be there when they need them."
Yellen defended the decision to protect uninsured deposits (above $250,000) at the two banks because officials needed to prevent depositors from racing to pull their money out, noting the risks of a potentially bigger crisis. She pointed out that "there can be contagions in situations like this, and other banks can become prey to the same kinds of runs."
Appropriate Supervision of Banks
Yellen added that regulators need to look into what created the problems at Silicon Valley Bank and Signature Bank, "and make sure our regulatory system and supervision is appropriately geared so that banks manage their risks to avoid problems of the type that these banks have suffered from."