On Tuesday, U.S. President Joe Biden said that his administration had done all that was necessary to solve the banking crisis with existing authorities but added that the crisis was “far from over.”
“We’ve done what we need to do executively. I feel confident things are settling out. The markets seem to be responding,” Biden told reporters before leaving North Carolina for the White House.
When asked if his administration had used up its unilateral moves, short of congressional action, to relieve banking sector stress, Biden replied, “No, it’s not over yet. We’re watching very closely. I think my team has handled it very well so far. And rather than get ahead of myself here, I think let’s let things move the way they are.”
In response to the situation, the president said his administration was considering legislative measures, which might be challenging in the divided Congress.
“I’m not sure whether we get much legislative change. But we’re looking at that as well,” Biden replied.
The bankruptcies of Silicon Valley Bank (SVB) and, days later, Signature Bank (SBNY.O), triggered a larger loss of investor confidence in the banking sector and stoked fears of a full-fledged financial crash.
The Biden administration immediately adopted numerous emergency steps to protect depositors in the two banks, while the Federal Reserve released more liquidity to assist banks throughout the sector in meeting depositors’ demands.
Last week, Biden told reporters that the Federal Deposit Insurance Corporation may move to guarantee deposits beyond $250,000 if other U.S. banks collapsed, but said he anticipated mid-sized banks to weather the sector’s present challenges.
An agreement to save Swiss bank Credit Suisse last week, as well as a sale of SVB’s assets to First Citizens Bancshares (FCNCA.O) this week, have helped to return some calm to markets, although investors remain anxious about more problems in the financial system.
Earlier in the day, an important U.S. regulator told a Senate subcommittee that SVB performed a “terrible” job of risk management before its collapse, defying legislators who blamed bank regulators for overlooking warning signs.
