President Joe Biden expressed confidence that the turmoil roiling the US banking system is easing after a week that saw markets shaken by bank failures.
(Bloomberg) — President Joe Biden expressed confidence that the turmoil roiling the US banking system is easing after a week that saw markets shaken by bank failures.
Asked if the crisis had calmed down, Biden told reporters “Yes,” on Friday as he departed the White House for Wilmington, Delaware.
The failures of Silvergate Capital Corp., Silicon Valley Bank and Signature Bank raised concerns about the health of the US financial system, compounded by troubles for Credit Suisse Group AG in Europe.
The Biden administration has moved to shore up confidence in the nation’s banks in recent days with the Federal Reserve offering a new backstop and the US Treasury and Federal Deposit Insurance Corp. stepping in to protect deposits at SVB and Signature.
White House officials have also sought to paint the tumult around Credit Suisse as a separate issue that is unrelated to what’s facing US institutions.
Yet the events of the last week have Wall Street on edge. The KBW Bank Index of 22 banking stocks fell another 5.3% on Friday.
Data from the Federal Reserve on Thursday also gave indications of the shock to the system, with banks borrowing a combined $164.8 billion in the most recent week from two backstops including an emergency program launched on Sunday.
Another institution, First Republic Bank, secured a $30 billion lifeline from larger US banks, but that reprieve failed to calm investors on Friday. First Republic shares closed down 33% to $23.03.
Biden declined to elaborate on Friday night and also did not respond to shouted questions about the Federal Reserve’s role in managing the ordeal. Senator Elizabeth Warren, a Massachusetts Democrat, has said that the central bank and its chair, Jerome Powell, failed in their supervisory capacity.
SVB was the second-largest bank failure in US history and the collapse has stoked fears about oversight of the industry.
The president on Monday delivered remarks from the White House to assure consumers and markets that the system was safe and that customers at both SVB and Signature would be protected.
A financial crisis would pose a serious challenge to Biden’s expected reelection bid and would come as the White House is already bracing for contentious negotiations with Republicans over raising the nation’s debt limit.
Earlier Friday, Biden called for Congress to approve tougher punishments on banking executives if mismanagement contributed to their institutions failing, arguing that the laws currently on the books are fail to hold executives accountable.
On Friday afternoon, the House Financial Services Committee scheduled its first hearing, for March 29, on the bank failures. The witnesses will include Martin Gruenberg, the chairman of the Federal Deposit Insurance Corporation, and Michael Barr, the Fed’s vice chair for supervision.
–With assistance from Billy House.
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