The Federal Reserve US (Fed, central bank), reported on Thursday that lent almost $12 billion to the country’s banks since Sundaywhen it announced that it would make the necessary funds available to cover any withdrawal by clients of the banking system.
In a joint statement with the Treasury Department and the Federal Deposit Insurance Corporation (FDIC)the financial authorities presented on Sunday a series of measures to reassure individuals and companies after the bankruptcy of the Californian bank Silicon Valley Bank (SVB) and two other entities in the sector.
In addition, the Secretary of the Treasury, Janet Yellen, the chairman of the Federal Reserve Board (FED), Jerome Powell, the president of the Federal Deposit Insurance Corporation (FDIC), Martin J. Gruenberg, and the Federal administrator of the Banking System, Michael J Hsu, They also pointed out that “11 banks announced a $30 billion funding package at First Republic Bank”.
The authorities stated that “This show of support from a group of large banks is very welcome and demonstrates the resilience of the banking system.”
Yellen made an appearance this Thursday in the Senate Finance Committee and pointed out that “the country’s banking system remains sound” and that Americans “can feel safe with their deposits.”
The actions of the First Republic They fell as much as 36%, but they rose after the information that the rescue package was being worked on, and at the end of the round they closed with a gain of almost 9%.
The rescue package would have a share of JPMorgan Chase, Bank of America, Citigroup and Wells Fargo each contributing $5 billion in uninsured deposits at First Republic.
Morgan Stanley and Goldman Sachs would have deposited $2.5 billion each and in the bank. The rest would be contributions from BNY Mellon, State Street, PNC Bank, Truist and US Bank with $1 billion each.
The Capitol Hill hearing was not easy for Yellen since it received strong questions from the Republican bench, at a time when concerns about the health of the world financial system are growing.
Facing strong questions from lawmakers about how the Federal Reserve’s interest rates contributed to bank failures and whether taxpayers would bear the brunt of a commitment to make bank depositors whole, Yellen stressed in ” the need for the federal government to act to guarantee stability in the market”.
The official admitted to the finance committee that “we must carefully analyze what happened to trigger these bank failures and examine our rules and supervision” to prevent bankruptcies from happening again“.
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