US Treasury Secretary: Possibility of Additional US Banks Declaring Bankruptcy

US Treasury Secretary Janet Yellen confirmed that the government believes it is possible that after the failure of the Silicon Valley bank, other US banks will declare themselves bankrupt and face massive withdrawals from their clients’ accounts.

And Yellen commented at the US Senate Finance Committee hearing on the possibility of a repeat of the situation that happened with the Silicon Valley Bank, which faced a huge outflow of customers that led to its bankruptcy, calling it a “systemic risk.” .”

“The likelihood of such a spread, in which other banks will suffer from massive withdrawals of funds from the accounts, seems very high, and the consequences will be very severe,” she said.

She explained that the Washington administration over the weekend assessed “this serious danger” and decided to provide access to all depositors to their accounts from March 13, “so that this does not cause the collapse of many banks and panic.”

She expressed concern that “banks will tighten lending conditions,” which could lead to a slowdown in economic growth.

And she added that the US authorities “are now focused on stabilizing the banking system and building confidence.”

Commenting on the reasons for the Silicon Valley Bank’s failure, Yellen said: “It is important for regulators to look at what happened at this bank, it is already clear that the high level of uninsured deposits made it vulnerable to sudden large withdrawals. from clients.”

Source: TASS

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