Janet Yellen: The Banking System is Stable after the "Decisive" Actions taken

@Wikimedia Commons

"The US banking system remains stable and Americans can feel confident that their deposits will be available when they are needed, thanks to the 'decisive and strong' action taken after Silicon Valley Bank's (SVB) failure to deal with the outflow of deposits at its end last week," Treasury Secretary Janet Yellen told the Senate Finance Committee, Reuters reported.

She also stressed that high inflation is currently "the number one economic problem".

Yellen said the emergency measures unveiled Sunday by the Treasury Department and other US financial regulators to bolster public confidence in the banking system after the collapse of California-based SVB underscored its determination to protect depositors.

"I can assure the members of the committee that our banking system is sound and that Americans can feel confident that their deposits will be there when they need them," she said.

"This week's actions demonstrate our strong commitment to ensure that depositors' savings remain safe," added the finance minister.

The comments were Yellen's first before federal lawmakers after the weekend's emergency measures to protect depositors and boost banking sector liquidity were met with both relief and surprise on Capitol Hill, where Democrats control the Senate and Republicans hold the House of Representatives.

Yellen said the SVB's collapse was essentially an inability to meet depositors' demands for their money after interest rate hikes by the Federal Reserve over the past year eroded (depreciated) the value of bond investments relied on to fund the customer withdrawals. She also noted the high level of uninsured deposits at SVB as an aggravating factor.

"There was a liquidity risk in this...

Continue reading on: