- The FDIC took control of SVB’s assets and Signature Bank over the weekend.
- Prez. Biden lays down a further course of action, reinstating the public’s faith.
- His plan of actions includes action against the management of both the banks.
Prez. Joe Biden announced the US banking system to be safe and has introduced stricter regulations after regulators took over SVB and Signature bank. The president spoke on behalf of the US federal authorities as he sought to hold the bodies responsible.
The US regulators closed the Silicon Valley Bank or SVB on Friday, March 10, after it witnessed a bank run, where depositors rushed to withdraw their deposits. It is termed as the second-largest bank failure in US history. President Joe Biden took to Twitter and detailed the planned action post-bank collapses. His tweet mentions depositors being able to access their money, including small businesses that require money to operate and pay their employees.
Biden also assured no taxpayers would have to bear the aftermath of the SVB and Signature bank debacle. To pay the depositors back, fees that banks pay into the Deposit Insurance Fund will be utilized. He also said about terminating the management of both banks. To support his action, Biden said,” if the FDIC takes over a bank, the people running that bank shouldn’t work there anymore.”
Biden Addressed the Investors
Biden’s statement could disappoint the investors as he said they are not being protected under the current situation. He adds that investors knowingly took a risk, and losing is a part of taking risks, which is the mechanism of capitalism. Although he also mentioned taking steps to reduce the risk of such events occurring again.
He reiterated that during the Obama-Biden administration, a few tough requirements were placed on the banks to ensure the crisis of 2008 wouldn’t happen again. But the preceding authority rolled some of those guidelines back. Further, President Biden requested that Congress and banking regulators strengthen the rules to reduce the future possibilities of bank failure of such kind.
New Rules For Slowing US Economy?
President Biden is determined to protect the American economy and small businesses in the future. Amid an already slowing economy, such collapses only add to the misery. In light of the occurrence, the Biden Government laid down the new budget and taxation policies for the fiscal year 2024. The new budget proposes increasing tax rates to curb inflation and stricter regulations for the corporate sector, especially for the “C Corporations”.
The new tax plan also aims to modify the investing market by proposing reforms for International taxation, Support for housing, and urban development. The energy sector was also added to the reform list, and the digital assets market found a special spot due to recent turmoil in the digital asset sector.
US regulators under the regime of Joe Biden are determined to reduce the shockwaves sent out by the SVB and Signature bank meltdown. The new framework and regulatory scrutiny done by the US authorities are working to intact the public’s faith in the banking sector and hold the responsible bodies fully accountable.
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