Biden pledges new rules to protect depositors after SVB collapse
Last updated on: 14 March,2023 01:15 pm
California-based SVB failed after its customers, mainly from the tech sector, made big withdrawals.
WASHINGTON (AFP) – President Joe Biden declared the US banking system “safe” and vowed stiffer bank regulation, after US regulators were forced to step in with a series of emergency measures following the collapse of Silicon Valley Bank (SVB) and Signature Bank, threatening to trigger a broader crisis.
“Americans can have confidence that the banking system is safe. Your deposits will be there when you need them,” he said.
The managers of the banks will be fired, Biden noted, and investors will lose money. “They knowingly took a risk, and when the risk didn’t pay off his adjusters lose their money. That’s how capitalism works,” he said.
California-based SVB failed after its customers, mainly from the tech sector, made massive withdrawals, and after its latest attempt to raise new money proved unsuccessful.
Its demise is not only the largest bank failure since Washington Mutual in 2008, but also the second-largest retail bank failure in the US.
Biden also promised new regulation after the biggest US bank failure since the 2008 financial crisis. Some of the Dodd Frank law passed after that crisis to prevent a repeat was rolled back by Republicans under former president Donald Trump, he noted.
“I’m going to ask Congress and the banking regulators to strengthen the rules for banks to make it less likely this kind of bank failure will happen again, and to protect American jobs as a small business,” he said.
Biden faces a divided Congress, which could make passing tougher new rules difficult.