Federal Reserve Chair Jerome Powell said the agency is prepared to “use all of our tools” to maintain safety, soundness and efficiency in the banking system following the collapse of three US lenders this month.
(Bloomberg) — Federal Reserve Chair Jerome Powell said the agency is prepared to “use all of our tools” to maintain safety, soundness and efficiency in the banking system following the collapse of three US lenders this month.
There’s a need for continued monitoring to better mitigate the “serious difficulties at a small number of banks,” Powell said during a news conference Wednesday, referring to failed lenders including Silicon Valley Bank.
“The banking system is sound and resilient,” Powell said in response to questions about containing deposits from fleeing various mid-size banks, adding that the financial system is well capitalized and has ample liquidity.
Powell underscored the extraordinary measures regulators took earlier this month to quell concerns. In one move, the Fed created a new lending program for banks, which has been the subject of intense political debate.
“We are committed to learning from this episode and will work to prevent episodes like this from happening again,” Powell said.
Read more: US Backstops Bank Deposits to Avert Crisis After SVB Failure
The Fed also said it would conduct an internal review of how it managed the crisis.
“It is clear we need to strengthen supervision and regulation,” Powell said. “These are not weaknesses that are, at all, broadly throughout the banking system. SVB was an outlier in terms of both its percentage of uninsured deposits and its holdings of duration risk. Supervisors did get in there and this still happened.”
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