Washington, Mar 13 (EFE).- The President of the United States, Joe Biden, sent a message of calm to the Americans by stressing that the country’s banking system “is safe” and assured the clients of the banks Silicon Valley Bank and Signature Bank that will have your deposits.
“Your deposits will be there when you need them,” he said in a brief speech to reporters a day after regulators launched a plan to protect Silicon Valley Bank (SVB) deposits after its collapse and closed another banking institution, the Signature Bank, under the same parameters.
“Americans can be confident that the banking system is secure. (…) In my Administration, nothing and no one is above the law,” stressed the president, assuring that the taxpayer will not assume any loss.
The SVB, based in California, announced last Wednesday that it was going to seek a capital increase to try to face financial difficulties that had led it to dump investments worth some 21,000 million dollars, with a loss of about 1,800 million.
That announcement led many clients to withdraw their funds, after which regulators had to close the bank on Friday for lack of liquidity. The company’s stock price subsequently plunged, which in turn affected the banking sector in the United States and other countries.
The Treasury Department, the Federal Reserve (Fed) and the Federal Deposit Insurance Corporation (FDIC) announced Sunday that customers will have access starting Monday to all money deposited in the SVB and promised a similar plan for the Signature Bank.
Biden advanced that the managers of these banks “will be fired” and stressed, as the regulators had pointed out the day before, that shareholders will not be protected.
“If the FDIC takes over the bank, the people who run it should no longer work there. (…) Investors will not be protected. They knowingly took a risk and when the risk fails investors lose their money. This is how capitalism works,” he said.
“We must reduce the risk of this happening again,” stressed the president, recalling that under the administration of Barack Obama, also a Democrat (2009-2017), “tough demands” were put in place on the banking sector that fell back in that of Republican Donald Trump (2017-2021).
For this reason, he indicated that he is going to ask Congress and regulators to strengthen the rules to reduce the chances of this type of collapse happening again and to protect jobs and small businesses.
“The bottom line is this: Our banking system is safe. Your deposits are safe. We will do what we have to do,” Biden added, making it clear that the money to assume the losses of the SVB and Signature Bank will come from the fees that banks pay into the Deposit Guarantee Fund.
Sharp falls in US banks
Several US banks started the week with sharp falls in their Wall Street shares after the collapse of Silicon Valley Bank and despite the emergency measures presented yesterday by banking regulatory bodies.
In the bars before the opening of the Wall Street stock market, the First Republic Bank was the most affected, with a 62% drop in its shares, while the falls were also pronounced in other banking entities such as Western Alliance Bancorp (- 61%), PacWest Bancorp (-24%) or Zions Bancorporation (-21%).
First Republic Bank, based in San Francisco, already issued a note yesterday with which it intended to reassure its clients, which it assured that it was “reinforcing and diversifying its liquidity” with access to new funds from the Federal Reserve and JP Morgan bank. Chase.
Specifically, it explained that the volume of liquidity available and still unused was 70,000 million dollars, a figure that did not include the amount that may be received from the emergency plan announced yesterday by the Federal Reserve in a joint statement with the Treasury Department and the Federal Deposit Insurance Corporation (FDIC).