Yellen Says Bank ‘Situation is Stabilizing,’ Smaller Banks Play Important Role
WASHINGTON (NEWSnet/AP) — Treasury Secretary Janet Yellen projected calm on Tuesday in response to regional bank collapses, but told a gathering of bankers that additional steps “could be warranted” if there are any new failures.
Yellen, who made her remarks at an American Bankers Association event, said overall “the situation is stabilizing."
She said what happened in recent weeks is a different set of circumstances from the 2008 financial meltdown, adding “2008 was a solvency crisis, rather what we're seeing now is contagious bank runs."
Silicon Valley Bank, based in Santa Clara, California, failed on March 10 after depositors rushed to withdraw money amid anxiety over the bank’s health. It was the second-largest bank collapse in U.S. history.
Shortly afterward, New York-based Signature Bank failed.
Regulators said depositors at both banks would be protected by federal deposit insurance.
And last week, efforts were made to prevent San Francisco-based First Republic Bank from collapsing.
In the meantime, the Justice Department and the Securities and Exchange Commission have launched investigations into the Silicon Valley Bank collapse.
Yellen said the government’s intervention was necessary to “protect the broader banking system" and more rescue efforts could be necessary, noting that the government is still closely monitoring the banking sector.
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