US Treasury Secretary Janet Yellen kicked off an unscheduled Financial Stability Oversight Council (FSOC) meeting with the country’s top financial regulators on Friday amid issues plaguing the US banking sector. US bank stocks and all four benchmark indices fell again on Friday as government efforts last week failed to quell the country’s financial calamity.
Janet Yellen kicks off an unscheduled meeting with the country’s top financial regulators
The US banking sector remains in crisis after the collapse of three large banks two weeks ago and the federal government’s steps to address the problems. On Friday afternoon, all four major benchmark US stock indices were flat, with bank shares in institutions including Truist, First Republic, Pacwest Bancorp and Western Alliance Bancorp slipping below the previous day’s close.
TO report from Bloomberg claims that US Treasury Secretary Janet Yellen has scheduled an unscheduled meeting with the country’s top financial executives and the FSOC. Yellen’s surprise meeting with the FSOC follows her recent comment, where she said the recent government intervention with Silicon Valley Bank and Signature Bank “was necessary to protect the US banking system in general.” In a speech to the American Bankers Association, Yellen further emphasized that “similar actions could be justified.”
In Bloomberg’s Christopher Condon report, the meeting between Secretary Yellen and the FSOC is closed to the public and the time of the event has not been disclosed. It is unclear what will come of the meeting. Yellen also took up the issue in the Senate Appropriations subcommittee, where she noticed that Congress should review the insurance methods of the Federal Deposit Insurance Corporation (FDIC). However, Yellen stressed that she “has not considered or discussed anything to do with general insurance or deposit guarantees.”
Yellen said decisions are likely to be made on a case-by-case basis if other banks fail and are considered a “systemic risk exception.” She added that “we are likely to invoke the systemic risk exception, which allows the FDIC to protect all depositors, and that would be a case-by-case determination.” The unscheduled meeting with Yellen and the FSOC on Friday will include members of the US Federal Reserve and various other financial regulatory agencies.
What do you think about the recent government interventions in the banking sector and do you think they will be effective in stabilizing the system? Share your thoughts on this topic in the comments section below.
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