Despite banking industry turmoil following Silicon Valley Bank’s collapse, Treasury Secretary Janet Yellen plans to tell lawmakers Thursday that the banking system “remains sound” and depositors’ savings “remain safe.
“I can assure the members of this Committee that our banking system remains sound, and that Americans can feel confident that their deposits will be there when they need them,” Yellen said in prepared testimony she’s set to deliver at 10 a.m. before the Senate Finance Committee.
Citing the steps regulators took in response to Silicon Valley Bank’s (SVB) failure, she added, “This week’s actions demonstrate our resolute commitment to ensure that depositors savings remain safe.”
Treasury, the Federal Reserve and the Federal Deposit Insurance Corporation took action Sunday to guarantee that depositors of SVB and Signature Bank of New York, another failed bank, would have access to all their money, including amounts above the up to $250,000 insured by FDIC.
The regulators will provide funding and recover it through a special assessment on the banks.
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The Fed also created a lending facility to assure that other financial institutions hit with bank runs can meet depositors’ withdrawals up to $250,000 without selling Treasury notes or other assets at a loss because of rapidly rising interest rates. Such sales were at the center of the crisis that felled SVB and Signature banks.
Despite the rescue measures, the stocks of other regional banks have plunged recently and online searches by Americans asking if their money is safe have surged as they worry their bank could be the next to topple.