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Biden confirms that customers of the 2 closed banks in the US will receive their deposits
- Two bank closures in three days in the US have alerted international financial markets
The White House raced against the clock. In a less than five-minute speech, Joe Biden tried to calm the mood:
“Americans can trust that the banking system is safe. Your deposits are there when you need them.
The President promised a thorough investigation and the culprits would be punished:
“Bank executives will be sacked. “No one is above the law in my regime,” he said.
The White House spent the weekend communicating with banks, regulators and Congress. now, Joe Biden is pushing lawmakers and regulators to tighten rules for banks and prevent the financial system from collapsing.
The Managing Director of SVB is one of the main proponents of this project – argued that his bank had a low risk profile.
Boston University finance professor Mark Williams explains the current crisis:
In 2008, banks made bad loans and were undercapitalized. Now the banks took deposits and put them into bonds at low interest rates, and when interest rates started to rise, values fell and the true value of the company caused a run on the bank as investors worried that they would lose it all if they didn’t get their money back, and it lost confidence.
“Hard questions now arise: What is the threshold for rescuing banks? Are reforms needed in the regulation of the financial system?”, he pondered.
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