Ajit Karn
“Small businesses across the nation with accounts at Silicon Valley Bank and Signature Bank can breathe a sigh of relief knowing they will be able to pay their employees. It will not cost taxpayers anything. This is funded by the fees banks pay into the Deposit Insurance Fund,” stated Biden.
However, the failures have caused concern among customers who hold their funds in other banks of comparable size.
Friday, US regulators shut down Silicon Valley Bank following a traditional bank run in which depositors rushed to withdraw their funds simultaneously. It is the second largest bank failure in U.S. history, second only to Washington Mutual’s 2008 failure.
Regulators announced that New York-based Signature Bank had also failed, a sign of how rapidly the financial crisis was spreading.
Biden emphasised the “safety” of the American banking system as he outlined the measures his administration is taking to prevent the collapse.
He placed the blame for the banking collapse on the previous administration. Biden stated, “During the Obama-Biden administration, we imposed stringent requirements on banks like Silicon Valley Bank and Signature Bank, including the Dodd-Frank Act, to prevent a repeat of the 2008 financial crisis. Sadly, the previous administration reduced some of these requirements. I will ask Congress and banking regulators to strengthen the rules for banks to reduce the likelihood of future bank failures and to protect American jobs and small businesses.
Monday morning at First Republic Bank in Studio City, a steady stream of customers withdrew their funds and moved them to larger banks.
As a result of the second- and third-largest bank failures in U.S. history, there were concerns about what could fall next.
Regional banks that are a couple of steps smaller than the “too-big-to-fail” megabanks that helped bring down the economy in 2007 and 2008 are under intense pressure.
ABC 7 reported that shares of First Republic fell 62.6% despite the bank’s announcement on Sunday that it had strengthened its finances with cash from the Federal Reserve and JPMorgan Chase.
In response to Eyewitness News, the First Republic attempted to calm its anxious customers amidst the turmoil.
First Republic stated in a statement, “We continue to meet the needs of our customers by opening accounts, making loans, executing transactions, and providing exceptional service in our offices and online.”
Large banks that have been repeatedly stress-tested by regulators since the 2008 financial crisis were less affected by the decline. JPMorgan Chase declined 1.2%, while Bank of America declined 3.9%.
Also read this :Asian Markets Sink After Silicon Valley Bank Collapse: 10 Points To Know
First Republic Bank is small in comparison to the largest banks in the United States.
