Treasury Secretary Yellen Commends "Swift Response" to Bank Failures

Treasury Secretary Janet L. Yellen highlighted the federal government’s "swift response" to the failure of Silicon Valley Bank ("SVB") and Signature Bank.

In her remarks to the American Bankers Association, Ms. Yellen commended the federal government for delivering the "swift response" needed to manage the collapse of SVB and Signature Bank while maintaining the public’s confidence in the U.S. banking system. She underscored that the government’s response demonstrated its "resolute commitment" to safeguarding depositors’ savings and preserving the banking system. She said that the government’s approach was based on:

• taking steps that ensured both the (i) protection of the "broader U.S. banking system" and (ii) reduction of the risk of further bank failures that could result in losses for the Deposit Insurance Fund; and
• implementing the Bank Term Funding Program that was designed to offer additional liquidity to the banking system in order to help banks meet the needs of their depositors.

Ms. Yellen asserted that the collapse of SVB and Signature Bank was "very different" than the events leading up to the global financial crisis due to the financial system being significantly stronger as a result of post-crisis reforms. Ms. Yellen maintained the importance of getting a full account of the banks’ failures and evaluating whether current regulatory frameworks are consistent with the risks that banks experience today.

Ms. Yellen reaffirmed that a "diverse banking system is critical" to the U.S. economy. She emphasized the role small-and mid-sized banks play in (i) providing credit and financial information to support small businesses and families, (ii) increasing competition within the banking sector, and (iii) possessing expertise about the communities in which they invest.