U.S. Treasury Secretary Janet Yellen (Janet Yellen) said on Thursday (23rd) that if necessary, federal emergency operations to support customers of Silicon Valley Bank and Signature Bank may be deployed once more in the future to ensure the safety of bank deposits in an attempt to stabilize market sentiment.
The successive failures of three banks in the United States (Silvergate Bank, Silicon Valley Bank, and Signature Bank) have led to a crisis in the global banking industry. Yellen revealed in congressional testimony on Wednesday that the Treasury Department did not study the expansion of federal deposit insurance, prompting U.S. stocks to fall sharply on Wednesday ,Dow JonesPlunged more than 500 points.
“As I said last week, the U.S. banking system is sound. Recent actions by the federal government demonstrate our determination to do what is necessary to keep depositors’ deposits safe,” Yellen’s testimony on Wednesday read.
However, she rephrased the above on Thursday as, “As I said, we have used important tools, we have acted quickly to prevent contagion, and these are tools that can be used once more. We have taken strong steps to ensure that the deposits of the American people are Safe. Of course, we are prepared to take additional action if necessary.”
Market sentiment was somewhat boosted by Yellen’s revised key testimony on Thursday, suggesting that emergency action by the Treasury Department in the future is still possible to prevent a wider contagion and maintain large-scale financial stability.
Driven by this bullish news, S&P andDow JonesAfter hearing the news at the end of Thursday, it turned red, and closed up more than 0.2% in a thrilling manner.NasdaqThe index closed up more than 1%. Still, bank stocks were in the dark, with First Republic Bank (FRC-US) fell 6 percent to $12.53 per share.
At present, the market is increasingly worried regarding regional banks. Recent research by Southern California, Northwestern University, Columbia University and the National Bureau of Economic Research (NBER) shows that there are nearly 190 banks in the United States that have potential run risks.
In fact, the executive branch of the U.S. government has little control over U.S. bank deposit insurance outside of an emergency crisis, as limits are set by Congress and are currently capped at $250,000 by the Federal Deposit Insurance Corporation (FDIC), starting at 2010 financial reform. In 2020, in response to the new crown epidemic, Congress once lifted the $250,000 cap.
So far, only a few Democrats have suggested that Congress consider raising the deposit protection limit following the collapse of Silicon Valley Bank, while influential Republicans in the House of Representatives are opposed. .
