The Council discussed current conditions in the banking sector and noted that “although some institutions have been under pressure, the US banking system remains strong and resilient.” In addition, “ongoing efforts by member agencies to monitor financial developments” were also discussed.
The United States Secretary of the Treasury, Janet Yellen, called this Friday a emergency meeting by videoconference to analyze the situation of the banking sector in the countrywhich was attended, among others, by the president of the Federal Reserve, Jerome Powellas reported by the Treasury through a statement.
During the meeting, the Council heard a Federal Reserve Bank of New York staff presentation on market developments.
The Council discussed current conditions in the banking sector and noted that, “while some institutions have been under pressure, the US banking system remains strong and resilient“. In addition, “the ongoing efforts of member agencies to monitor financial developments” were also discussed.
Previously, Yellen has pointed out that the Government is not considering extending the protection of all bank depositsruling out the possibility of a blanket extension to protect small and regional banks across the country.
With these statements, Yellen has come to pass the words that he pronounced this Tuesday before the American Bankers Association, and where he affirmed that the government was ready to provide and support more deposits “if necessary” with the aim of offering guarantees and stop contagion if the banking crisis worsens.
During her speech in the US Senate, the former president of the Federal Reserve has indicated this Wednesday that there could be “reasoned discussions“about whether he current $250,000 limit for insured deposits should be removed as part of long-term systemic reforms of the banking sector, but that this decision would require extraordinary circumstances, and probably an act of Congress.
The head of the Treasury has also recalled that neither shareholders nor bondholders are protected by the Government in the event of a bankruptcy. “It is important to make it clear that shareholders and debt holders of failed banks are not protected by the government and that taxpayers will not pay for the losses of these banks,” he said.
Yellen has also indicated that the emergency measures adopted last weekend were taken to protect the country’s banking system and economy and that thanks to these actions, “aggregate deposit outflows from regional banks have stabilized“
Source: Ambito
