The impending failure of the Silicon Valley Bank is causing great concern among the American population. Author: from right to left
WASHINGTON, March 13th. — Shares of global banks in Asia and Europe woke up in the red after shares in 12 US banks fell on Monday after US President Joseph Biden’s speech on the economy, according to a Market Watch survey detailing that 12 banks lost more than 10 percent. and five of them are over 20 percent.
Thus, shares of First Republic Bank fell by 65.1%, while Western Alliance Bancorp, PacWest Bancorp and Charles Schwab lost 75.9%, 41.0% and 19% respectively, Reuters news agency specifies. Meanwhile, according to MarketWatch, the assets of Comerica Inc. fell by 45.7%, KeyCorp – by 34.6%, Zions Bancorp – by 31.6% and Fifth Third Bancorp – by 25% and 9%.
Although the President of the United States said that “Americans can have confidence in the safety of the banking system,” he also ruled that investors would not be protected because “they knowingly took a risk, and when the risk didn’t work out for them, the investors lost their money.” . . That’s how capitalism works.”
Biden assured the population of his country of the stability of the country’s banking system, despite the problems that arose in the sector last week, RT notes.
Speaking at a press conference, the President defended the drastic measures taken by the government to avoid the consequences for small businesses, jobs and the banking system as a whole due to problems that arose at Silicon Valley Bank and later at Signature Bank.
The head of state pointed out that now the assets of banks are under the control of regulators, and that all clients who had deposits in these banks will be protected and will have access to their money from banks’ contributions to the Deposit Insurance Fund.
He added that the management of these banks would be fired and investors would not be protected.
They will investigate how the banks got into these circumstances, and those responsible must be held accountable, said Biden, who will ask Congress and banking regulators to “strengthen the rules that apply to banks so that this type of bank failure is less likely to happen again.” At the same time, he assured that “Americans can be confident in the security of the banking system.”
Last Friday, the U.S. banking system experienced its biggest bankruptcy since the 2008 financial crisis: Silicon Valley Bank (SVB), the 16th largest bank in the country, collapsed after savers mostly associated with the tech sector and venture-backed companies capital, withdrew from their money as fears of a crisis spread within the bank.
Two days later, regulators closed New York’s Signature Bank due to systemic risks and to prevent contagion in the sector, RT added.
Banking regulators seized control of institutions and listed the Federal Deposit Insurance Corporation (FDIC), for its English abbreviation) in order to have at its disposal the assets of organizations.
The US Treasury Department, the Federal Reserve and the FDIC have assured that Signature Bank and SVB depositors will be compensated and taxpayers will not suffer any losses.
Trump looks at the fiasco of 1929
In turn, former President Donald Trump, committed to his campaign for the 2024 Republican nomination, lashed out at his successor Joseph Biden for the economic situation in his country, highlighting the turmoil going on in the banking sector.
“Given what is happening to our economy and proposals for the biggest and most stupid tax increase in US history, […] Joe Biden will go down in history as the Herbert Hoover of today.” wrote in the social network “Social Truth”, referring to the president, whose mandate was marked by the collapse of 1929 and the catastrophic global crisis.
“We will have a great depression, much larger and more powerful than in 1929. As proof, the banks are already starting to collapse!!!” Trump added.
But after the collapse of the SVB was announced, several commentators and Democratic congressmen pointed to Trump as one of the culprits, as he signed a law in 2018 that relaxed rules for regional and mid-sized banks. The ruling allowed banks with less than $250 billion in assets to avoid mandatory Federal Reserve scrutiny, while the previous limit was $50 billion.
As for the situation in Europe, the STOXX banking index fell 5.85% after falling 3.7% on Friday, resulting in the biggest two-day drop since March 2022. AG briefly hit a new all-time low after dropping more than 15 percent.
Source: Juventud Rebelde