President Biden Promises Safety of Banking System, No Taxpayer Burden

President Joe Biden took to the podium on Monday in an effort to reassure Americans that their deposits and the entire banking system are safe, despite the collapse of Silicon Valley Bank and Signature Bank.^[0] He promised taxpayers would not bear the costs and the money would instead come from fees that banks pay into the federal Deposit Insurance Fund.^[1]

The president also noted that he would ask Congress and the 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.^[2] “No losses will be borne by the taxpayers,” he said.^[3]

The failure of Silicon Valley Bank, the second-largest bank to collapse in United States history and the largest since the Great Recession, stemmed from an 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.^[4] This prompted the federal government to scramble to backstop deposits at the two banks.^[5]

President Biden promised that the U.S. Treasury, Federal Reserve, and the FDIC would ensure that all depositors at Silicon Valley Bank would have access to all their money on Monday.^[6] He also noted that the management of any bank that is taken over by the FDIC will be fired, so those responsible will be held accountable.^[7]

Investors, however, will not be protected because they knowingly took a risk. He declared that investors in the banks would not be safeguarded, noting that they had willingly assumed a risk and consequently ended up losing their money when the risk did not generate the desired results – that is the way capitalism works.

President Biden said that he is committed to holding those responsible for this mess fully accountable and to strengthening oversight and regulation of larger banks so that similar issues do not arise in the future. He concluded by reassuring Americans that the government will do “whatever is needed” to ensure the safety of the banking system.

0. “SVB collapse: Don’t say the B-word” GZERO Media, 13 Mar. 2023, https://www.gzeromedia.com/svb-collapse-dont-say-the-b-word

1. “Biden says banking system is safe, promises accountability for Silicon Valley Bank failure” Yahoo Life, 14 Mar. 2023, https://www.yahoo.com/lifestyle/biden-blames-trump-deregulation-silicon-133854058.html

2. “Brainard Must Help Contain SVB Crisis She Warned Was Coming” Yahoo Finance, 14 Mar. 2023, https://finance.yahoo.com/news/brainard-must-help-contain-svb-110000355.html

3. “Amid crisis, Biden tells Americans ‘banking system is safe'” ABC News, 13 Mar. 2023, https://abcnews.go.com/Politics/biden-speaks-banking-crisis/story?id=97820883

4. “Biden says America's ‘banking system is safe' after regulators back up all SVB deposits” FierceBiotech, 13 Mar. 2023, https://www.fiercebiotech.com/biotech/biden-says-americas-banking-system-safe-after-regulators-back-all-svb-deposits

5. “Biden says banking system safe after two banks fail in a matter of days” CBS News, 14 Mar. 2023, https://www.cbsnews.com/video/biden-says-banking-system-safe-after-two-banks-fail-in-a-matter-of-days/

6. “Biden seeks to calm Americans after government intervenes in SVB collapse” The Washington Post, 13 Mar. 2023, https://www.washingtonpost.com/politics/2023/03/13/biden-silicon-valley-bank-federal-regulators/

7. “Biden emphasizes US banking system is safe after Silicon Valley Bank collapse” CNN, 13 Mar. 2023, https://www.cnn.com/2023/03/13/politics/biden-banking-speech/index.html