Biden says federal deposit insurance could be exploited more if banks fail By Reuters

by The Insights

© Reuters. U.S. President Joe Biden speaks during a joint news conference with Canadian Prime Minister Justin Trudeau, in Ottawa, Ontario, Canada March 24, 2023. REUTERS/Blair Gable

By Andrea Shalal

OTTAWA (Reuters) – President Joe Biden said on Friday that federal deposit insurance could be tapped for deposits over $250,000 if other U.S. banks fail, expressing confidence that U.S. banks in medium size would survive the tensions in the sector.

Biden said U.S. banks were in “pretty” good shape, people’s savings were safe, and he didn’t see an industry ready to explode.

“If we find that there is more instability than it appears, we would be able to ask the FDIC to use the power at their disposal to guarantee these (deposits) greater than $250,000, as they have done before,” he told reporters at a press conference at the Canadian capital of Ottawa.

Regional lenders in the United States are facing a crisis of confidence after the collapse of Silicon Valley Bank and Signature Bank (NASDAQ:) this month. The turmoil has prompted regulators to take unprecedented steps to secure SVB and Signature filings.

In recent days, Biden, US Treasury Secretary Janet Yellen and other banking regulators have released statements to reassure the public about the safety of the US banking system.

Still, investors have been dumping bank stocks around the world over the past two weeks, with rapid increases in interest rates to curb inflation blamed by some as the root cause of the debacle.

After a volatile week, the S&P Bank Index ended slightly lower, while the KBW Regional Banks Index rose 2.9%.

The Swiss government-brokered bailout deal for Credit Suisse further spooked investors.

Biden said it would take some time for the situation to calm down, but he said what happened with Credit Suisse in Europe had no consequences for U.S. banks.

“I don’t see anything on the horizon that is about to explode. But I understand there is unease about it,” he said.

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