The Federal Treasury Secretary asserts that the Fed will stabilize the US financial economy
- Janet Yellen emphasized that the Fed will stabilize the US financial system.
- The US Treasury Secretary stated that the Fed will look into the defaulted depositors of the two banks.
- Yellen added that the Fed will not consider all banks equally.
Janet Yellen, US Treasury Secretary, confirmed on Thursday that the federal government will maintain the financial economy of the United States. The minister defended that the Federal Reserve was directed towards protecting depositors in the giant banks that were closed recently, thus preventing the current liquidity crisis and stabilizing the US financial system.
Notably, on the Senate Finance Committee, Yellen asserted that American citizens can be confident about their deposits, claiming:
Our banking system remains intact and Americans can feel confident that their deposits will be there when they need them.
However, the minister added that not all depositors will be granted relief under the FDIC insurance limits of $250,000 per account, in contrast to clients of slumping Silvergate Bank and signature bank (NASDAQ:).
Adding to her point, Yellen stressed that a bank would only be considered when a majority of the Fed’s members along with the president and Treasury secretary observe that “failure to protect uninsured depositors will create systemic risks and significant economic and financial consequences.”
Earlier, the Federal Reserve on Sunday announced its plan to provide additional funding to eligible institutions, to support the US banking system, in addition to traditional FDIC insurance.
In addition, the Fed has endowed institutions with multiple programs such as one-year lending plans and relaxed borrowing guidelines for short-term financing, creating a more flexible stage for distressed investors and institutions.
Yellen, while commenting on the public support from the Fed, said its actions will help depositors meet their needs, citing:
This will help financial institutions to meet the needs of all depositors. This week’s actions demonstrate our firm commitment to ensuring that depositors’ savings remain safe.
Moreover, while clarifying investor queries, Yellen reiterated that the current contributions from the Fed will be temporary and cannot be anticipated for subsequent bank failures.
The publication of the Federal Reserve will stabilize the US financial economy, reassured the Secretary of the Treasury appeared for the first time in the issuance of coins.