- The banking crisis that flared up after SVB's collapse is "stabilizing," Treasury Secretary Janet Yellen said Tuesday.
- Yellen was set to deliver that assurance to the American Bankers Association.
Treasury Secretary Janet Yellen said Tuesday the crisis of depositors leaving small and mid-sized US banks is "stabilizing," and should the problem worsen, the government could provide further support.
Yellen's assurance was made in prepared remarks she was set to deliver to the American Bankers Association and after this month's abrupt collapse of Silicon Valley Bank. The Treasury Department, the FDIC and the Federal Reserve moved to protect all depositors after its failure, as well as depositors as seized Signature Bank, to stave off a broader run on banks.
"Our intervention was necessary to protect the broader U.S. banking system," Yellen said in remarks for the American Bankers Association's meeting in Washington, according to The New York Times. "And similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion."
Regulators said all depositors at SVB and SBNY would be covered, including those whose accounts exceeded the $250,000 limit set by the FDIC.
"The situation is stabilizing. And the U.S. banking system remains sound," Yellen said, according to multiple reports.
Meanwhile, US officials were looking into how to temporarily expand FDIC coverage to all deposits if the banking crisis were to expand, Bloomberg reported Tuesday.
Staff at the Treasury Department were reviewing whether federal regulators have sufficient emergency authority to temporarily insure deposits higher than the FDIC's $250,000 account limit without formal consent from a politically divided Congress, sources with knowledge of the talks told Bloomberg.
SVB's depositors pulled more than $40 billion during a bank run, with fears about its health sparked by a $1.8 billion loss on the sale of a bond portfolio. The portfolio's value was slashed by climbing interest rates as the Fed tightened monetary policy to fight inflation.
Deposits have been racing out of regional banks and into large banks considered too big to fail. Among those hit is First Republic Bank, which last week landed a $30 billion rescue package from bigger lenders including JPMorgan Chase and Bank of America. JPMorgan CEO Jamie Dimon was working on a second round of funding for the San Francisco-based lender, according to The Wall Street Journal.