Federal Deposit Insurance Corporation (FDIC) headquarters in Washington, DC, United States, on Monday, March 13, 2023.
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President Joe Biden said on Friday that federal deposit insurance could be tapped on deposits over $250,000 if other U.S. banks fail, expressing confidence that the banks Mid-sized US goods will survive the tension in this area.
Biden said US banks are in “pretty good shape”, people’s savings are guaranteed and he doesn’t see an industry ready to explode.
“If we find that there is more uncertainty than there appears to be, we will be able to ask the FDIC to use the power it has to ensure insures (deposits) over $250,000 as they did.” Ottawa, the capital city of Canada.
Regional lenders in the United States are facing a crisis of confidence following the collapse of Silicon Valley Bank and Signature Bank this month. The turmoil prompted unprecedented moves by regulators to secure SVB and Signature deposits.
In recent days, Biden, US Treasury Secretary Janet Yellen and other banking regulators have released statements intended to reassure the public that the US banking system is safe.
However, investors have dumped bank shares globally over the past two weeks, with rapid rate hikes to rein in inflation that some see as the root cause of the crash.
After a volatile week, the S&P Bank index ended modestly lower, while the KBW Regional Banks index rose 2.9%.
Rescue agreement brokered by the Swiss government for Credit Suisse spooked investors even more.
Biden said it would take some time for the situation to calm down, but he said what happened to Credit Suisse in Europe had no consequences for US banks.
“I don’t see anything about to explode. But I understand there’s a concern about this,” he said.
