President Joe Biden says U.S. banking system ‘safe’, but urges new regulations

The U.S. President reassured that their banking system is safe despite sudden collapse of SVB.

Updated - March 13, 2023 08:05 pm IST

Published - March 13, 2023 06:55 pm IST - Washington

U.S. President Joe Biden delivers remarks on the banking crisis after the collapse of Silicon Valley Bank (SVB) and Signature Bank, in the Roosevelt Room at the White House in Washington on March 13, 2023.

U.S. President Joe Biden delivers remarks on the banking crisis after the collapse of Silicon Valley Bank (SVB) and Signature Bank, in the Roosevelt Room at the White House in Washington on March 13, 2023. | Photo Credit: Reuters

President Joe Biden on March 13, 2023 reassured Americans that their banking system is secure in the wake of the collapse of SVB and said he wants tougher regulations to prevent future crises.

“Americans can have confidence that the banking system is safe. Your deposits will be there when you need them,” Mr. Biden said in televised remarks from the White House after Silicon Valley Bank’s failure and the federal takeover of a second bank.

While the government is ensuring that SVB depositors get their money back, “no losses will be borne by the taxpayers,” Mr. Biden said.

“The money will come from the fees that banks pay into the deposit insurance.”

Also read: Silicon Valley Bank ‘contagion’ may leave India unscathed

Mr. Biden challenged Congress to enact more stringent regulations, saying that “tough” safeguards brought in after the 2008 financial collapse had been undone under his Republican predecessor Donald Trump.

“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 would happen again,” Mr. Biden said.

He made clear he expects the consequences to fall on the shoulders of those responsible and that the government’s rapid response over the weekend was not a bank bailout, as happened in 2008.

Also read: HSBC acquires British arm of stricken Silicon Valley Bank

“We must get the full accounting of what happened and why, (so) those responsible can be held accountable,” he said.

Not only will taxpayers not be liable for covering the deposits, but “the management of these banks will be fired,” he said.

Once a bank is taken over by the government, “the people running the bank should not work there anymore.”

Mr. Biden stressed that investors who bought into SVB were not getting bailed out.

“They knowingly took a risk and when the risks didn’t pay off, investors lose their money. That’s how capitalism works,” he said.

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