Top US regulators said on Friday that while some banks are coming under stress, the overall financial system is still sound, seeking to reassure depositors and investors rattled by recent bank failures.
The statement came after Treasury secretary Janet Yellen convened the Financial Stability Oversight Council on Friday morning, a panel that includes the head of the Federal Reserve and the Federal Deposit Insurance Corporation.
“The council discussed conditions in the banking sector and noted that while some institutions have come under stress, the US banking system remains sound and resilient,” the Treasury department said after the meeting. “The council also discussed ongoing efforts at member agencies to monitor financial developments.”
Separate weekly data released on Friday showed that bank deposits dropped by the most in almost a year, an indication of the concerns Yellen and her colleagues are seeking to stave off.
While policymakers from Washington, to Frankfurt, to Zurich have asserted that banks are well capitalised, investor confidence in a number of lenders has been waning. California-based First Republic Bank has lost about half its market capitalisation this week, while Germany’s Deutsche Bank AG at one point on Friday tumbled 15%, the most since the pandemic shock of March 2020.
The data released on Friday covered the week to March 15, when two mid-sized US banks collapsed as depositors rushed to secure their funds, including Silicon Valley Bank. US regulators have since come under particular pressure to offer greater clarity about their readiness to guarantee uninsured bank deposits.
Over the past week, investors have struggled to interpret messages on the issue. While Yellen and Federal Reserve chair Jerome Powell have repeatedly stated that US bank deposits are safe, Yellen triggered a sell-off in stocks earlier this week when she said regulators weren’t unilaterally prepared to offer a blanket guarantee.
Some banks under stress, but financial system sound — Yellen, US regulators
Image: Bloomberg
Top US regulators said on Friday that while some banks are coming under stress, the overall financial system is still sound, seeking to reassure depositors and investors rattled by recent bank failures.
The statement came after Treasury secretary Janet Yellen convened the Financial Stability Oversight Council on Friday morning, a panel that includes the head of the Federal Reserve and the Federal Deposit Insurance Corporation.
“The council discussed conditions in the banking sector and noted that while some institutions have come under stress, the US banking system remains sound and resilient,” the Treasury department said after the meeting. “The council also discussed ongoing efforts at member agencies to monitor financial developments.”
Separate weekly data released on Friday showed that bank deposits dropped by the most in almost a year, an indication of the concerns Yellen and her colleagues are seeking to stave off.
While policymakers from Washington, to Frankfurt, to Zurich have asserted that banks are well capitalised, investor confidence in a number of lenders has been waning. California-based First Republic Bank has lost about half its market capitalisation this week, while Germany’s Deutsche Bank AG at one point on Friday tumbled 15%, the most since the pandemic shock of March 2020.
The data released on Friday covered the week to March 15, when two mid-sized US banks collapsed as depositors rushed to secure their funds, including Silicon Valley Bank. US regulators have since come under particular pressure to offer greater clarity about their readiness to guarantee uninsured bank deposits.
Over the past week, investors have struggled to interpret messages on the issue. While Yellen and Federal Reserve chair Jerome Powell have repeatedly stated that US bank deposits are safe, Yellen triggered a sell-off in stocks earlier this week when she said regulators weren’t unilaterally prepared to offer a blanket guarantee.
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