Yellen tells Congress that U.S. banking system still ‘sound’ after collapse of Silicon Valley Bank
Treasury Secretary Janet Yellen told lawmakers Thursday that the nation’s banking system “remains sound” and that Americans shouldn’t worry about their deposits, a week after the second-largest bank collapse in U.S. history.
Ms. Yellen told the Senate Finance Committee that government regulators and Treasury “took decisive and forceful actions to strengthen public confidence” in the banking system despite the failure of Silicon Valley Bank.
“I can reassure the members of the committee that our banking system remains sound and that Americans can feel confident that their deposits will be there when they need them,” she said.
SVB failed last week when depositors rushed to withdraw $42 billion in a single day and the bank couldn’t cover all the withdrawals. The Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. worked out a deal last weekend to ensure that depositors would have access to their money beyond the normal insured limit of $250,000.
The Justice Department and the Securities and Exchange Commission are investigating the bank’s collapse.
Critics have called the government’s rescue plan a bailout, although President Biden has insisted that taxpayer money is not being used. Republicans, including Sen. Michael Crapo of Idaho, pressed Ms. Yellen on whether the bank faced a cash crunch because its long-term debt lost value after a series of inflation-fighting interest rate hikes by the Fed in the past year.
Ms. Yellen agreed that the bank’s long-term investments “had lost market value” due to the rate hikes.