According to media sources, US President Joe Biden attempted to reassure Americans on Monday that the banking system will stand up.
“Due to the fast action in my administration over the past few days, Americans can have faith that the banking system is safe.
“Your deposits will be there when you need them. Small businesses across the country that deposit accounts at these banks can breathe easier knowing they’ll be able to pay their workers and pay their bills. And their hardworking employees can breathe easier as well,” he said at the White House, The Guardian reported.
With many Americans still resentful of Washington’s help to huge banks during the 2008 global financial crisis, Biden made a point of stating in his speech that no bailouts would take place under his watch.
“No losses, and this is an important point, no losses will be borne by the taxpayers,” he said. “Let me repeat that: no losses will be borne by the taxpayers. Instead the money will come from the fees that banks pay into the Deposit Insurance Fund.”
Biden also noted that “management of these banks will be fired”, 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”.
The President has asked Congress to reinstate banking restrictions that were put in place following the 2008 financial crisis but were pushed back by then-President Donald Trump.
In the aftermath of the financial crisis, President Barack Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, which increased financial regulations on banks, but Trump eased those rules in 2018, which Biden said set the stage for the failures of Silicon Valley Bank and Signature Bank, a New York-based institution that closed over the weekend, according to The Guardian.
“We must reduce the risk of this happening again,” Biden said. “During the Obama-Biden administration, we put in place tough requirements on banks, like Silicon Valley Bank and Signature Bank, including the Dodd-Frank law, to make sure that the crisis we saw in 2008 would not happen again. Unfortunately, the last administration rolled back some of these requirements. 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, and to protect American jobs and small businesses.”
According to The Guardian, he also asked for an investigation into how the two banks failed.