U.S. President Biden says customers’ deposits at failed banks safe

THE U.S. President, Joe Biden on Monday reaffirmed the safety of deposits for American bank customers after the closure of two U.S. banks on Friday.

“Americans can have confidence that the banking system is safe,’’ Biden said during a brief address in Washington.

According to him, customers who had deposited their money at Silicon Valley Bank and Signature Bank, which are  closed over the weekend, are protected and will have access to their savings as of today, Biden said. This also applies to small businesses.

Biden stressed that the bank would not receive government funds.

“And this is an important point,  no losses will be borne by the taxpayers. I’m going to repeat that no losses will be borne by the taxpayers.’’

Instead, Biden said, the money will come from the fees that banks pay into the Deposit Insurance Fund and investors behind the bank would also have to bear the cost.

“Investors in the banks will not be protected. They knowingly took a risk, and when the risk didn’t pay off, investors lose their money. That’s how capitalism works.’’

In addition, the managers would be fired, he said.

Earlier, on Friday, the Silicon Valley Bank, which specialised in start-up financing, was temporarily closed and placed under state control after a failed emergency capital increase.

This had caused unrest worldwide. Other banks also came under considerable pressure on the stock exchange. On Sunday, the New York-based Signature Bank was also closed.

Biden said it was unfortunate that the last administration roll backed some requirements, adding that he would ask Congress and the banking regulators to strengthen banking rules so it would be less likely that this type of failure would reoccur. (NAN)

E.C