Ajit Karn
President Joe Biden reassured the American people on Monday that their banking system is secure in the wake failure of SVB and stated that he wants stricter regulations to prevent future crises.
“Americans can have confidence in the security of the banking system. Your deposits will be accessible when required “Biden said in televised remarks from the White House following the failure of Silicon Valley Bank and the nationalisation of a second bank.
Biden stated that while the government is ensuring that SVB depositors receive their money back, “no losses will be borne by taxpayers.”
The funds will come from the fees paid by banks for deposit insurance.
Biden urged Congress to enact stricter regulations, claiming that “tough” safeguards enacted after the 2008 financial crisis had been rolled back by his Republican predecessor, Donald Trump.
Biden stated, “I’m going to ask Congress and banking regulators to strengthen the rules for banks so that this type of bank failure is less likely to occur again.”
He made it clear that he expects those responsible to bear the consequences and that the government’s swift response over the weekend was not a bank bailout, as occurred in 2008.
“We must obtain a complete account of what transpired and why in order to hold those responsible accountable,” he said.
Not only will taxpayers not be responsible for covering the deposits, but he added, “the management of these banks will be fired.”
Once a bank is taken over by the government, “its management should no longer be employed there.”
Biden emphasised that investors who purchased SVB shares would not be bailed out.
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“Investors lose their money as a result of taking calculated risks that did not pay off. This is how capitalism operates “he said.
