Biden urges US citizens to trust banks amid ongoing collapse
Following the Silicon Valley Bank collapse, US President Joe Biden sought to portray calm on March 13 by assuring US citizens that the country’s financial and banking systems are secure.
In a move that has sent shockwaves throughout the banking industry, The Federal Deposit Insurance Corporation (FDIC) took possession of Silicon Valley Bank’s assets on March 10 and Signature Bank’s assets over the weekend over alleged insolvency claims.
FDIC, the federal regulator in charge of assuring the security of bank deposits, decided to take control of the banks after determining that they were financially unstable with gaping holes in their financial books.
The closure of SVB was the second-largest banking failure in US History. That prompted president Biden to hold a press address on the matter. He announced that his administration would impose tighter regulations concerning the management of banking institutions moving forward to prevent the event from happening as it did in 2008 during the catastrophic financial crash.
Biden has assured that a thorough investigation of what transpired leading to the collapse is ongoing as customers gain access to their funds. He also said no one would be exempted from this during his administration.
The current objective is to reduce the likelihood that this may happen again.
According to Joe Biden, everyone who has deposits in those institutions can now access their funds. Small firms that depend on these revenues to cover employee salaries and maintain operations are included.
Furthermore, taxpayers will bear no losses as the fees that banks pay into the Deposit Insurance Fund will compensate for repaying the deposits.
But, as customary, when the FDIC takes over a bank, the management of both banks will be sacked for poor management practices. However, President Biden explained that investors of the fallen banks would neither be compensated nor shielded by the government because they intentionally took a risk and would bear the repercussions of their investment failure.
