Depositors withdrew savings, and investors broadly sold off bank shares as the federal government raced to reassure Americans that the banking system is secure following two bank failures
March 13, 2023 at 4:58 pm EDTPresident Joe Biden speaks about the banking system in the Roosevelt Room of the White House, Monday, March 13, 2023 in Washington.
The selloff happened in part because the country woke up to a new banking system and investors had to find the winners and losers, banking experts said. “Everything is now covered. That’s a fact. No matter how specialized or isolated your bank is, if there’s a risk of contagion, regulators have made it clear that they are going to intervene,” said Norbert Michel, a banking policy expert at the libertarian-leaning Cato Institute.
International regulators also had to step in to ease fears. The Bank of England and U.K. Treasury said they facilitated the sale of a Silicon Valley Bank subsidiary in London to HSBC, Europe’s biggest bank. The deal protected 6.7 billion pounds of deposits. “Our view was to make sure that the entire banking community here in New York was stable, that we can project calm,” Hochul said Monday at a news conference.
The two failed banks themselves have not been rescued, and taxpayer money has not been provided to them.
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