US President Joe Biden on Monday attempted to reassure Americans that the banking system will hold up, media reports said.
“Thanks to the quick action of my administration over the past few days, Americans can have confidence 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 bitter over Washington’s assistance to large banks during the 2008 global financial crisis, Biden made a point in his speech of saying no bailout was happening 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 called for Congress to restore banking regulations first implemented after the 2008 financial crisis but rolled back by then President Donald Trump.
The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act signed by President Barack Obama increased financial regulations on banks in the wake of the crisis, but in 2018, Trump eased those rules – 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, The Guardian reported.
“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.”
He also called for an investigation into how the two banks went down, The Guardian reported.