US banking system is safe, claims President Joe Biden

• US has announced that it will guarantee all deposits at Silicon Valley Bank.
• And Signature Bank, attempting to prevent more bank runs.
• The US government has taken steps to prevent a contagion from spreading.

President Joe Biden declared that the US would do “whatever is needed” to support the banking industry.

Following a succession of bank failures that raised questions about the viability of the financial system.

After the government announced that it would guarantee all deposits at Silicon Valley Bank and Signature Bank, he made his remarks.

When SVB fell in the midst of an uprising of customer withdrawals, it is attempting to prevent more bank runs.

Americans should “rest assured that our banking system is safe”, Mr. Biden said.

Beginning on Monday, individuals and organizations with funds deposited with SVB will have access to all of their cash, he said.

The measure, which will be paid for by fees regulators charge banks, won’t result in any losses for taxpayers, he claimed. He stated that the bank’s executives would be dismissed.

The failures of SVB, the 16th largest bank in the nation, and Signature sparked concerns that they could lead to a financial crisis, so Mr. Biden spoke early on Monday.

“Every American should feel confident that their deposits will be there if and when they need them,” President Biden said. “Let me also assure you. we will not stop at this. We’ll do whatever is needed.”

Regulators shut down SVB, which specialized in lending to technology startups, on Friday after seizing its assets.

Since the beginning of the financial crisis in 2008, it was the biggest failure of a US bank.

It happened after SVB had to raise cash quickly to cover a loss from the sale of assets that were negatively impacted by increasing interest rates.

Customers rushed to withdraw money as soon as they heard about the problems, creating a cash shortage.

Authorities also announced on Sunday that they had taken over Signature Bank of New York, which had a large number of cryptocurrency-related clients and was thought to be the organisation most susceptible to another bank run after SVB.

There is concern that the collapses, which followed the demise of Silvergate Bank last week, may be an indication of problems developing for other businesses.

The US stock market was essentially flat when trading began on Monday. San Francisco-based First Republic Bank’s shares fell by over 70% on Monday as investors fled the company out of concern that it would be the next target.

Regulators also introduced a new method for providing banks with access to emergency money as part of their efforts to regain confidence.

Banks will now find it simpler to borrow from the Federal Reserve in times of crisis thanks to the announcement that it will provide help through a new Bank Term Financing Program.

Authorities in Canada temporarily took possession of the assets of SVB’s branch there, while HSBC announced it was purchasing the UK portion of SVB for £1.

The chief banking regulator announced its intention to pursue long-term dominance.

The US government “moved vigorously to avoid a contagion forming,” according to Capital Economics’ head North American economist Paul Ashworth.

“Rationally, this should be enough to stop any contagion from spreading and taking down more banks, which can happen in the blink of an eye in the digital age. But contagion has always been more about irrational fear, so we would stress that there is no guarantee this will work,” he added.

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