U.S. President Joe Biden stated on the 13th (local time) that the American banking system is safe amid the financial sector crisis triggered by the collapse of Silicon Valley Bank (SVB). He also clearly expressed his intention to strengthen financial regulations to prevent such incidents from recurring.
At a White House press conference that day, President Biden said, "Thanks to swift actions over the past few days, Americans can be confident that the banking system is safe." He emphasized, "Your deposits will be there when you need them," adding, "All customers who had deposits at SVB can rest assured. Your deposits are safe." He also noted, "the same applies to small businesses nationwide that need to pay salaries, settle bills, and continue operations."
President Biden also reiterated that taxpayers will not bear any losses. Amid criticism that the emergency measures taken the previous day to fully protect SVB deposits and lend funds to banks facing liquidity shortages amounted to a bailout, he made it clear that any losses incurred during these emergency measures will not be covered by taxes. He confirmed, "that money will be covered by fees paid by banks to the Deposit Insurance Fund (DIF)."
However, he pointed out that "(investors who are not deposit customers, such as the bank’s shareholders or some unsecured creditors) will not be protected," stating, "They took risks and will lose money. That is how capitalism works."
Along with this, President Biden confirmed that financial regulations will be strengthened to prevent such incidents from happening again. He said, "To reduce the likelihood of such bank failures recurring, I will ask Congress and financial authorities to strengthen banking regulations that can protect American jobs and small businesses."
There was also mention of holding bank executives accountable. He said, "There are important questions about how these banks ended up in this situation in the first place," emphasizing the need to understand why this happened and who should be held responsible. He then reiterated, "The bottom line is this: Americans can be reassured that our banking system is safe."
SVB, which was a funding source for U.S. startups, was abruptly closed on the 10th due to a bank run caused by a liquidity crisis. With total assets of $209 billion (277 trillion won), SVB’s collapse is the largest in the U.S. banking sector since the failure of Washington Mutual during the 2008 global financial crisis. The previous day, U.S. financial authorities also shut down Signature Bank, based in New York.
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