Finance

Biden reacts to bank failures: 'The banking system is safe'

President Joe Biden attempted to calm fears of additional bank failures after the FDIC took control of two U.S. banks.

Biden reacts to bank failures: 'The banking system is safe'
AP
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Less than an hour before the markets opened Monday, President Joe Biden responded to regulators seizing a pair of U.S. banks in recent days. 

Regulators seized Silicon Valley Bank on Friday and New York-based Signature Bank on Sunday. The two seizures resulted in two of the three largest bank failures in U.S. history.

“Americans can have confidence the banking system is safe,” President Biden said.

He emphasized that taxpayers would not pay for the expenses to operate the banks and said bank fees would cover costs.  The president added that bank management would be fired and investors would not be protected.

Silicon Valley Bank seized after run by depositors
Silicon Valley Bank seized after run by depositors

Silicon Valley Bank seized after run by depositors

Silicon Valley, the nation's 16th largest bank, was heavily exposed to the tech industry and there's little chance of contagion in the banking sector.

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During his brief address Monday, President Biden called on Congress to “strengthen rules” on the banking industry.

The Federal Deposit Insurance Corporation is forming bridge banks that assume the deposits and liabilities of the banks. 

The FDIC insures deposits of up to $250,000. Had the FDIC not taken action, those with more than $250,000 were at risk of losing their accounts. 

“All customers who had deposits to these banks can rest assured they'll be protected and they'll have access to their money as of today,” President Biden said. “That includes small businesses across the country that bank there and need to make payroll, pay their bills and stay open for business.”