US Secretary of the Treasury, Janet Yellen, addressed the American Bankers Association today, tackling the topic on everyone’s mind. The precarious financial services industry and the possibility for contagion.
The collapse of multiple banks in the US has now spread to Europe. This past week, the Swiss government rushed to patch together a bailout for Credit Suisse, crafting a package for UBS to take over the struggling bank.
Yellen told the bankers that things are improving:
“The situation is stabilizing. And the U.S. banking system remains sound. The Fed facility and discount window lending are working as intended to provide liquidity to the banking system. Aggregate deposit outflows from regional banks have stabilized.”
She told the crowd that they continue to monitor the situation while outlining all of the actions that have been taken, including:
- Protecting all depositors in the resolutions of Silicon Valley Bank and Signature Bank
- A new facility to provide additional liquidity to the banking system. The Fed’s new lending facility – the Bank Term Funding Program
- A deal which 11 banks contributed $30 billion to support First Republic
She noted that a review of the current regulatory regime is necessary, alluding to questions as to why bank monitors failed in their jobs.
Yellen said events demanded “decisive and forceful actions” to protect the economy and support confidence in the US banking system.
