Treasury Secretary Janet Yellen will tell a Senate committee that the US banking system “remains sound” and will defend the Biden administration’s actions to protect depositors at two failed banks and thwart a broader financial transition, according to prepared testimony ahead of Thursday’s hearing.
Lawmakers on the Senate Finance Committee are expected to question Yellen on Sunday about an aggressive intervention by US regulators and officials to guarantee all deposits at two collapsed regional banks, Silicon Valley Bank and Signature Bank, and set up a new Federal Reserve facility. Provide liquidity to other banks.
“I can assure committee members that our banking system will be sound, and Americans can feel confident that their deposits will be there when they need them,” Yellen will say at the hearing, which begins at 10 a.m. ET. “This week’s actions demonstrate our strong commitment to ensuring that depositors’ savings are protected.”
Although US government measures stabilized markets earlier in the week, investors were reeling on Wednesday from turmoil at Credit Suisse, the Swiss bank that Yellen will have to address.
Most Democratic lawmakers have praised President Joe Biden’s administration for taking steps to protect the banking system, and blamed the rollback of financial regulation under Donald Trump for paving the way for the crisis.
But some Republicans have charged that U.S. officials and regulators mismanaged the financial system by keeping borrowing costs too low for too long during the coronavirus pandemic, fueling inflation and forcing the Fed to raise interest rates so badly that it hurt some banks.
While some have suggested Biden’s actions were justified, others have criticized it as another dangerous bailout. But Yellen will defend the administration’s move along with the Fed and the Federal Deposit Insurance Corporation, according to her prepared remarks.
“The government took decisive and forceful steps to strengthen public confidence in our banking system,” he said. “On Monday morning, customers were able to access all the money in their deposit accounts so they could make payroll and pay bills.”
