Biden pushes for more regulation after Silicon Valley Bank collapse

Mar 13, 2023

Simone Del Rosario Business Correspondent

By Simone Del Rosario (Business Correspondent), Emma Stoltzfus (Editor), Brent Jabbour (Producer)

President Joe Biden on Monday said the U.S. banking system is safe in the wake of the collapse of Silicon Valley Bank and Signature Bank. The banking failures caused concerns of broader contagion in the sector.

“Americans can have confidence that the banking system is safe,” Biden said before departing on a trip to the West coast. “Your deposits will be there when you need them.”

Regulators took action Friday to close Silicon Valley Bank after a bank run, which occurs when a large amount of customers attempt to withdraw funds at the same time. New York-based Signature Bank failed shortly after. The burden of the bank failures would not fall on American taxpayers, according to Biden.

“No losses will be borne by the taxpayers,” Biden said. “Instead, the money will come from the fees that banks pay into the Deposit Insurance Fund.”

As part of the government action to protect the banks’ customers, Biden said management “will be fired.” He also made clear that investors in Silicon Valley Bank and Signature Bank would not get the benefit of government protection.

“Investors in the banks will not be protected,” Biden continued. “They knowingly took a risk. And when the risk didn’t pay off, investors lose their money. That’s how capitalism works.”

Biden said his administration is investigating how the banking collapse happened in the first place and is asking Congress and regulators to strengthen regulations for banks to make sure a failure like this does not happen again.

The failure of Silicon Valley Bank is one of the largest in American history, second only to the failure of Washington Mutual during the 2008 financial crisis.

While Biden and other banking institutions attempt to assuage bank customers, the contagion is starting to spread. At the start of Monday’s trading day, shares in San Francisco’s First Republic Bank had fallen more than 65%. Meanwhile, Western Alliance Bancorporation dropped more than 80% and PacWest Bancorp fell more than 50%.

The Associated Press contributed to this report.

Tags: Banking, First Republic Bank, Joe Biden, Signature Bank, Silicon Valley Bank

President Joe Biden:

Americans can have confidence that the banking system is safe. Your deposits will be there when you need them.

First, all customers who had deposits in these banks can rest assured I want to rest assured they’ll be protected and they’ll have access to their money as of today. That includes small businesses across the country that bank there and need to make payroll, pay their bills and stay open for business.

No losses will be borne by the taxpayers. Instead the money will come from the fees that banks pay into the Deposit Insurance Fund because of the actions of that, because of the actions that our regulators have already taken. Every American should feel confident that their deposits will be there if and when they need them. Second, the management of these banks will be fired. If the bank is taken over by FDIC, the people running the bank should not work there anymore. Third, and investors in the banks will not be protected. They knowingly took a risk. And when the risk didn’t pay off, investors lose their money. That’s how capitalism works. And fourth, there are important questions of how these banks got into the circumstance. In the first place. We must get the full accounting of what happened and why those responsible can be held accountable. And my administration, no one in mind that no one is above the law. And finally, we must reduce the risk of this happening again.