Bank regulation in the United States

Markets fell in Asia and Europe on May 23 , tracking a sell-off on Wall Street sparked by a string of better-than-expected U.S. data that added to worries the Federal Reserve will hold off on cutting interest rates this year.

Investment tycoon Warren Buffett has said that messaging from the U.S. government over the regional banking crisis had been "poor," suggesting that is why confidence has not returned among consumers.    

Regulators seized troubled First Republic Bank and sold all of its deposits and most of its assets to JPMorgan Chase Bank in a bid to head off further banking turmoil in the U.S.

U.S. central bankers face an unenviable task when they gather in Washington this week: Tackling persistent inflation without adding to financial sector turmoil after Silicon Valley Bank's rapid collapse.

The Federal Reserve has raised rates eight times since last year in the face of decades-high inflation as it looks to cool the economy without tipping it into a recession.

America's largest banks moved on March 16 to shore up First Republic, easing fears that the regional lender could be the next domino to fall after collapses including Silicon Valley Bank.

A consortium of 11 US private banks, including Bank of America, Citigroup and JPMorgan Chase, announced they would deposit $30 billion into First Republic.

"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.

The US administration stepped in on Sunday with a series of emergency measures to shore up confidence in the banking system after the failure of Silicon Valley Bank threatened to trigger a wider systemic crisis.

In a move that sent global banking shares into turmoil, US regulators on Friday shut down Silicon Valley Bank, as markets fretted over possible contagion from the biggest banking failure since the 2008 financial crisis.

The Federal Reserve took massive emergency action on March 15 to try to help the economy withstand the coronavirus by slashing its benchmark interest rate to near zero and saying it would buy $700 billion in Treasury and mortgage bonds.

This led to a rise in the dollar and a decline in Wall Street indices, writes NOVA TV. 

The US Federal Reserve has cut interest rates for the first time in eleven years. 

Interest rates, which affect the cost of borrowing for credit cards and mortgages, are now set to hover between 2% and 2.25%.