Biden Administration Takes Action to Safeguard U.S. Banking System

President Joe Biden on Monday sought to reassure Americans that the U.S. banking system is safe in the wake of the failure of Silicon Valley Bank and federal intervention.[0] Taking action to “reduce the risks of this happening again,” he said he would ask Congress and banking regulators “to strengthen the rules for banks to make it less likely this kind of bank failure would happen again and to protect American jobs and small businesses.”[0]

The Silicon Valley Bank collapse was caused by the bank’s attempt to raise funds through an underwritten public offering for up to $2.25 billion to cover losses from its Treasury and mortgage-backed securities portfolios.[1] Due to the unsuccessful attempt, a multitude of businesses – such as those in biotechnology – had to hastily extract their money in a bank run.[2] In order to make good on those withdrawals, SVB had to sell part of its bond holdings at a steep loss of $1.8 billion.[3]

The U.S. Treasury, the Federal Reserve and the Federal Deposit Insurance Corp. announced that the government would back Silicon Valley Bank deposits beyond the federally insured ceiling of $250,000, addressing concerns about uninsured funds held at the country’s 16th largest bank.[4] Investment stakeholders in the failed banks are not protected, according to the President, who said, “Investors in the banks will not be protected. They knowingly took a risk, and when the risk [doesn’t] pay off, investors lose their money. That’s how capitalism works.”[5]

In order to forestall any further collapses in the financial sector, the Federal Reserve has provided other banks with access to funds.[1] Meanwhile, the FDIC will cover losses to the fund from fees assessed on banks.[6] According to experts who specialize in government bank bailouts, the actions of the federal government this weekend to shore up Silicon Valley Bank's depositors are nothing if not a bailout.[7]

The White House does not want to be associated with “the connotation of rescuing fat cats, rescuing bankers,” said Richard Squire, a professor at Fordham University's School of Law and an expert on bank bailouts.[8] He also claimed that the White House's avoidance of the word “bailout” is an attempt to avoid being “brushed with the tar of the 2008 financial crisis.”[7]

The Biden administration and federal regulators are taking action to prevent a ripple effect and to ensure that American jobs and small businesses remain protected.[7]

0. “Post-mortems begin on Silicon Valley Bank failure” Roll Call , 14 Mar. 2023,

1. “Wall Street pummels regional banks, despite Biden's assurances” CNN, 13 Mar. 2023,

2. “Biden says America's ‘banking system is safe' after regulators back up all SVB deposits” FierceBiotech, 13 Mar. 2023,

3. “After Silicon Valley Bank collapses, plenty of worries over what's next” NPR, 14 Mar. 2023,

4. “Biden says ‘the banking system is safe' after Silicon Valley Bank shutdown” NBC News, 13 Mar. 2023,

5. “Biden seeks to calm Americans after government intervenes in SVB collapse” The Washington Post, 13 Mar. 2023,

6. “What to know about FDIC insurance and how your money is protected” ABC News, 13 Mar. 2023,

7. “Banking experts reject Biden denial of Silicon Valley depositor bailout: ‘This is certainly a bailout'” Fox News, 14 Mar. 2023,

8. “Former U.S. bank bailout administrator: Silicon Valley Bank is being bailed out” NPR, 14 Mar. 2023,

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