US President Joe Biden has attempted to calm fears among investors and business owners following the collapse of Silicon Valley Bank and Signature Bank, the two major US banks that recently failed. He has assured small businesses across the country that had accounts at these banks that they will be able to pay their workers, and that the American banking system remains “safe.” Biden has also promised to take timely and effective actions to prevent any further crisis and to protect American jobs and small businesses.
The collapse of Silicon Valley Bank has triggered massive concern among customers with money in other similarly-sized banks, despite constant assurances by US officials and agencies. The bank experienced a traditional bank run, where depositors rushed to withdraw their funds all at once, resulting in its closure. It is the second largest bank failure in US history after the 2008 failure of Washington Mutual. In a sign of how fast the financial bleeding was occurring, regulators also announced that New York-based Signature Bank had failed.
The collapse of these banks has put pressure on regional banks that are a couple of steps below the size of the massive, “too-big-to-fail” banks that helped take down the economy in 2007 and 2008. This has raised concerns about the safety of the banking system in general, despite Biden’s assurances.
During his address, Biden emphasized the fact that the American banking system remains “safe” and that his administration is taking necessary steps to prevent any further crisis. He also blamed the previous US administration for the banking failure, stating that the Dodd-Frank Law was put in place during the Obama-Biden administration to make sure that the crisis seen in 2008 would not happen again. Unfortunately, the previous administration rolled back some of these requirements. As a result, Biden is going to ask Congress and banking regulators to strengthen the rules for banks to make it less likely that this kind of bank failure would happen again.
Biden’s comments come as small businesses across the country are struggling to recover from the economic impact of the COVID-19 pandemic. The collapse of these banks could have far-reaching consequences for these businesses and for the overall health of the American economy. Biden’s assurance that small businesses will be able to pay their workers is an attempt to ease some of the anxiety surrounding this issue.
Despite the assurances from Biden and other US officials, the collapse of Silicon Valley Bank and Signature Bank is a reminder of the fragility of the American banking system. It highlights the need for continued oversight and regulation to prevent future failures and to protect American jobs and small businesses. The collapse of these banks has also raised concerns about the safety of smaller banks and their ability to weather a crisis. As the US economy continues to recover from the pandemic, it is crucial that the banking system remains stable and that necessary measures are taken to prevent any further crisis.
