Federal regulators would provide similar protections for uninsured depositors at smaller banks as they did for Silicon Valley Bank and Signature Bank, if there is evidence the failures of those smaller banks would pose a larger contagion risk, Treasury Secretary Janet Yellen said today. Speaking at the ABA Washington Summit and clarifying congressional testimony last week, she said the government’s recent actions were not focused on aiding specific banks or classes of banks.
“Our intervention was necessary to protect the broader U.S. banking system,” Yellen said. “And similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion. I believe that our actions reduced the risk of further bank failures that would have imposed losses on the Deposit Insurance Fund, which is paid for through fees on insured banks.”
During a Q&A with ABA President and CEO Rob Nichols following her speech, Yellen reiterated the Biden administration’s message that the banking system is sound and said that aggregate deposit outflows at regional banks have stabilized. Yellen also said that while the current crisis may lead regulators and policymakers to evaluate whether regulatory adjustments are needed, she didn’t want to speculate on what those may be at this time. “What I’m focused on is stabilizing the system and restoring the confidence of consumers,” she said.
ABA Banking Journal Staff
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