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WATCH LIVE | Yellen to tell Congress that US banking system ‘remains healthy’


WASHINGTON (AP) — A week after the collapse of the second-largest bank in U.S. history, Treasury Secretary Janet Yellen is set to tell the Senate Finance Committee that the nation’s banking system “remains healthy” and Americans “can feel confident” in their deposits.

Yellen will be the first Biden administration official to face lawmakers over the decision to protect uninsured money at two regional banks, a move some observers have criticized as a “bank bailout.”

“The administration has taken strong and tough measures to strengthen public confidence” in the US banking system, Yellen said in prepared testimony released ahead of her appearance. “I can assure the members of the Committee that our banking system remains sound and that Americans can be confident that their deposits will be there when they need them.”

In less than a week, Silicon Valley Bank, based in Santa Clara, California, collapsed after depositors rushed to withdraw money amid concerns about the bank’s health. Then regulators met over the weekend and announced that New York’s Signature Bank had also failed. They ensured that all depositors, including those with uninsured funds in excess of $250,000, were protected by federal deposit insurance.

The Justice Department and the Securities and Exchange Commission have since launched investigations into the collapse of Silicon Valley Bank.

Thursday’s hearing is set to consider President Joe Biden’s budget proposal, but it comes after the sudden collapse of the nation’s 16th largest bank and a financial institution for tech entrepreneurs. While Yellen will be ready to talk about the spending proposals, the hearing will inevitably turn to the government’s decision-making process to intervene in bank failures.

Lawmakers are likely to wonder whether the bailout money is a bailout, the extent to which taxpayers will be expected to step in and the possibility of new regulation affecting the banking system.

Yellen told CBS’ “Face the Nation” last Sunday that the bailout plan was not under consideration, saying “we’re not going to do it again,” referring to the U.S. government’s response to the 2008 financial crisis that led to large-scale government policy to save large American banks.

Yellen, a former Federal Reserve chair and former president of the San Francisco Federal Reserve during the 2008 financial crisis, was a leading figure in last weekend’s resolution, which was designed to prevent broader systemic problems in the banking sector.

“This week’s actions demonstrate our strong commitment to ensuring that depositors’ savings remain safe,” she said in testimony Thursday.


Follow AP’s coverage of Treasury Secretary Janet Yellen at https://apnews.com/hub/janet-yellen.


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