Yellen assured Americans of the sustainability of the country’s banking system

The U.S. banking system remains resilient, and Americans can be assured that their deposits will be available when needed, thanks to decisive action taken after Silicon Valley Bank’s failure to withstand an influx of depositors led to its collapse last week, Treasury Secretary Janet Yellen said.

Speaking before the Senate Finance Committee, Yellen said Sunday that the Treasury Department and other financial regulators took extraordinary steps to bolster public confidence in the banking system.

“I can assure committee members that our banking system is sound and that Americans can be assured that their deposits will be safe and sound,” Yellen told lawmakers. – The actions taken this week demonstrate our strong commitment to safeguarding depositors’ savings.”

The comments were Yellen’s first speech to Congress since last weekend’s emergency measures to support depositors and boost banking sector liquidity.

Yellen said the collapse of Silicon Valley Bank was caused by the bank’s inability to meet depositors’ attempts to withdraw money from their accounts after interest-rate increases by the Federal Reserve (Fed) over the past year reduced the value of bond investments that were used to fund depositor withdrawals. She also noted the high level of uninsured deposits at Silicon Valley Bank as an aggravating factor.

According to Yellen, the Treasury Department worked with the Fed and the Federal Deposit Insurance Corporation (FDIC) to develop protections for all depositors at both banks (the second bank to fail was Signature Bank) by creating a new mechanism to give banks access to emergency funds. The Fed also made it easier for banks to borrow from it in emergencies.

“It is important to note that taxpayer money is not being used or put at risk by these actions,” Janet Yellen said.

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