Biden ensures customers of the 2 closed banks in the US receive funds deposited
- The closure of two banks in the US in three days is putting the international financial market on alert
The White House raced against the clock. In the almost fiveminute speech, Joe Biden tried to calm the mood:
“Americans can be confident that the banking system is safe. Your deposits are there when you need them.”
The President promised a thorough investigation and punishment of those responsible:
“Bank managers are being fired. In my government, no one is above the law.”
The White House spent the weekend liaising with banks, regulators and Congress. Now Joe Biden is urging lawmakers and regulators to tighten rules on banks and prevent a financial system collapse.
SVB’s chief executive was one of the main supporters of the project, citing that his bank had a low risk profile.
Finance professor Mark Williams from Boston University explains the current crisis:
“In 2008, the banks made bad loans, not enough capital. Now the banks were taking deposits and investing them in bonds with low interest rates, and as interest rates began to rise, values fell and the real value of the company was eroded. The rush to the bank came as investors feared they would lose everything if they didn’t withdraw their money. It was a loss of confidence.”
“Now the tough questions are: where is the line for bank bailouts? Do we need reforms in the regulation of the financial system?” he mused.