Biden reassures the Americans, after the bankruptcy of SVB

United States President Joe Biden sent a message of reassurance to Americans on Monday, saying the country’s banking system is “safe” and assuring customers of Silicon Valley Bank and Signature Bank that they will receive their deposits.

“Your deposits will be there when you need them,” he told reporters in a brief speech a day after regulators launched a plan to protect Silicon Valley Bank’s (SVB) deposits after it failed and closed another banking institution, Signature Bank, under the same parameters.

“Americans can have confidence that the banking system is safe. (…) In my administration, nothing and no one is above the law,” the president stressed, assuring that the taxpayer will not bear the loss.

SVB, based in California, announced last Wednesday that it would seek a capital increase to try to deal with financial difficulties that have led it to shed about $21,000 million worth of investments, at a loss of about $1,800 million.

The announcement prompted many customers to withdraw their funds, prompting regulators to close the bank on Friday due to a lack of liquidity. After that, the company’s share price fell, which in turn affected the banking sector in the United States and other countries.

The Treasury Department, the Federal Reserve (Fed) and the Federal Deposit Insurance Corporation (FDIC) announced Sunday that customers will have access to their money deposited at SVB starting Monday and promised a similar plan for Signature Bank.

Biden said that the managers of those banks “will be fired” and emphasized, as the regulators emphasized a day earlier, that shareholders would not be protected.

“If the FDIC takes over the bank, the people who run it should no longer work there. (…) Investors will not be protected. They have knowingly taken the risk and when the risk is gone, the investors lose their money. This is how capitalism works,” he said.

With his appearance, he tried to dispel the ghosts of the financial crisis of 2008.

“We have to reduce the risk of this happening again,” the president emphasized, recalling that under the administration of Barack Obama, also a Democrat (2009-2017), “tough demands” were placed on the banking sector, which fell in the past year. that of Republican Donald Trump (2017-2021).

For that reason, he has indicated that he will ask Congress and regulators to tighten the rules to reduce the chances of this type of collapse happening again and protect jobs and small businesses.

“The bottom line is this: our banking system is safe. Your deposits are safe. We will do what we have to do,” Biden added, making it clear that the money to cover the losses of SVB and Signature Bank will come from the fees the banks put into the Fund. for guaranteed deposits.