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Samorost 1 full4/29/2023 “I am firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again.” The president is set to speak on Monday, to lay out how the US will maintain a resilient banking system. “The American people and American businesses can have confidence that their bank deposits will be there when they need them,” Joe Biden said in a statement. This means banks will be able to easily access depositors’ cash, without having to sell government bonds that have fallen in value over the last year, as interest rates have risen. “But contagion has always been more about irrational fear, so we would stress that there is no guarantee this will work.”īanks will also now be allowed to borrow essentially unlimited amounts from the Federal Reserve for the next year, as long as the loans are matched by safe government securities, a way to prevent financial firms from having to sell a class of investments that have been losing value because of the Fed’s own high interest rate policies. “Rationally, this should be enough to stop any contagion from spreading and taking down more banks, which can happen in the blink of an eye in the digital age,” said Capital Economics analyst Paul Ashworth. Depositors in Signature would also be made whole, the statement said. The announcement came as Signature Bank was closed on Sunday by regulators, the second to fail in a week.
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