Regulators are ready to do more to protect the banking system.
Treasury Secretary Janet Yellen told a subcommittee of the House Appropriations Committee Thursday (March 23): “Certainly, we would be prepared to take additional actions if warranted,” Bloomberg reported Thursday.
That statement was added to remarks that were otherwise largely similar to those Yellen delivered to a Senate hearing a day earlier, in which she said that Treasury officials had not considered a temporary expansion of federal insurance to all U.S. bank accounts, adding that this would require congressional legislation, according to the report.
Those remarks had shaken investors Wednesday (March 22), and the statement about taking additional actions seemed to be aimed at reassuring them, the report said.
In the wake of this month’s collapses of banks that faced rapid withdrawals of large amounts of deposits by anxious customers, investors are closely watching regulators’ remarks on the likelihood of the extension of federal deposit insurance, per the report.
It was reported Monday (March 20) that federal officials were examining ways to expand deposit protections to halt a possible financial meltdown.
Staff members at the U.S. Treasury Department were studying whether regulators have the authority to temporarily insure deposits above the traditional $250,000 limit without congressional approval, Bloomberg reported Monday.
The report comes amid a flurry of activity among legislators around the collapses of Silicon Valley Bank and Signature Bank, both of which were taken over by the Federal Deposit Insurance Corporation (FDIC) this month.
Reps. Patrick McHenry and French Hill, the chair and vice chairman of the House Financial Services Committee, wrote to the President Joe Biden administration Wednesday, demanding detailed information on the response to the bank failures.
McHenry of North Carolina and Hill of Arkansas also wrote to Yellen, asking for more clarification on the government’s decision to declare the banks a “systemic risk” when announcing the takeover.
The House Financial Service Committee has scheduled a hearing on the banking crisis for Wednesday (March 29).
The committee is set to hear from Martin Gruenberg, chair of the board of directors at the FDIC; Michael S. Barr, vice chair for supervisors at the Federal Reserve’s board of governors; and Nellie Liang, the Treasury Department’s undersecretary for domestic finance.
