U.S. Treasury Assures Bank Deposit Protection

U.S. Treasury Secretary Janet Yellen assured that the banking system is stabilizing after the bank runs that led to the failure of Silicon Valley Bank and the closing of Signature Bank by regulators.

Yellen added that additional measures may be needed to protect depositors’ funds if the country’s smaller banks are infected by the financial crisis that threatens to spread to other institutions.

U.S. banking has suffered from the recent crisis that has been triggered by bank management problems and the Federal Reserve’s increasing interest rate hikes.

Although Wall Street experts say that behind the bank failure, there are obvious signs that something is not right within the U.S. financial system, in addition to the greed and avarice of some bankers, as Keith Fitz-Gerald, trader and director of Fitz-Gerald Group, states.

“With regard to who’s to blame here, I think that the greed and avarice that has long been present in Silicon Valley has come home to roost,” Fitz-Gerald recently commented.

But he also said the Fed was partly to blame. “The Federal Board of Reserve change from fractional reserves to no reserves, and that let banks like SVB go out and start buying assets instead of simply loaning money.”

According to Yellen, the steps the government has taken to guarantee the uninsured deposits of the two failed banks and increase bank liquidity demonstrate the “resolute commitment to take the necessary steps to ensure that depositors’ savings and the banking system remain safe.”

The Treasury Secretary explained that the actions taken “were not focused on aiding specific banks or classes of banks,” but was an intervention “necessary to protect the broader U.S. banking system.”

In her opinion, the actions of the Fed, the Federal Deposit Insurance Corp (FDIC), and the Treasury have succeeded in reducing the risk of further bank failures.

Santiago Contreras is a Venezuelan professional journalist and writer. He has a degree in economic journalism from the Universidad de los Andes and a master's degree in Communication in Organizations from the Complutense University of Madrid. He regularly writes on various topics, including economics, finance, and cryptocurrency, for various international media outlets.

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