Yellen tells Congress US banking system ‘remains sound’

A week after the second-largest bank failure in U.S. history, Treasury Secretary Janet Yellen told the Senate Finance Committee on Thursday that the nation’s banking system “remains healthy” and depositors may “feel confidence.”

Yellen is the first Biden administration official to testify before Congress over the decision to preserve uninsured funds at two failing regional banks, a move that some Republicans have characterized as a “bailout”

In her testimony before the committee, Yellen stated, “The government took bold and robust efforts to enhance public trust” in the U.S. financial sector. “I can tell Committee members that our banking system is solid and that Americans may be certain that their savings will be available when they need them.”

Silicon Valley Bank, headquartered in Santa Clara, California, collapsed in less than a week as depositors hurried to withdraw funds out of concern for the bank’s viability. Then, over the weekend, authorities assembled and declared that the New York-based Signature Bank had also collapsed. They guaranteed that all depositors, including those holding uninsured sums in excess of $250,000, were covered by federal deposit insurance.

Since then, the Justice Department and the Securities and Exchange Commission have initiated investigations into the collapse of Silicon Valley Bank.

Thursday’s session, intended to address President Joe Biden’s budget proposal, after the abrupt failure of the 16th-largest bank in the country and the banking institution of choice for digital entrepreneurs. When Yellen prepared to discuss expenditure recommendations, the discussion eventually went to the government’s intervention decision-making process.