Following the failures of Silicon Valley Bank (SVB) and Signature Bank during the previous week, U.S. President Joe Biden declared he would ask Congress and bank regulators to tighten regulations for financial institutions.
Biden claimed in statements made from the White House on Monday that the Dodd-Frank Act, which was passed in 2010 and signed by then-President Barack Obama (while Biden was vice-president), imposed “strong criteria” for banks, but later relaxed by the administration of former President Donald Trump.
It was declared on Sunday by the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Treasury Department that they would make sure that the depositors in the collapsed banks would be compensated.
Two of the three largest bank collapses in American history occurred within days of one another at Silicon Valley Bank ($209 billion in assets) and Signature Bank ($110 billion in assets), which represent $209 billion and $110 billion in assets, respectively. Washington Mutual Bank’s failure during the Great Financial Crisis was the biggest collapse.
Biden stated, “We must have a complete accounting of what occurred and why those involved can be held accountable. “No one is above the law in my government. Finally, we need to lessen the likelihood that this will occur again.
In order to prevent a repeat of the 2008 financial crisis, the Obama-Biden government imposed strict regulations on banks like Silicon Valley Bank and Signature Bank, including the Dodd-Frank statute.
Senior management was fired, but depositors will still have access to all of their money, according to a statement released jointly on Sunday by the Treasury Department and federal banking regulators. In his remarks, Biden made a reference to this by saying that anyone in charge of a bank that the FDIC has taken over should no longer work there.
He continued, “Bank investors will not be protected. “They voluntarily assumed a risk. Investors lose money when a risk does not pay off. That is the way capitalism operates.
The president added that fees on banks would be used to refill the FDIC’s Deposit Insurance Fund rather than tax dollars to cover the expense of saving the two lenders.
Similar points were made by New York Governor Kathy Hochul and New York Department of Financial Services Chief Adrienne Harris, who both spoke on Monday in response to their state’s decision to close down Signature Bank.
It’s not a bailout, Harris insisted.
Harris also disputed the notion that Signature was doomed as a result of its contact with the crypto business.