President Joe Biden has called for an investigation into the collapse of Silicon Valley and Signature banks.
“There are important questions of how these banks got into the circumstances in the first place,” the president said during a brief speech Monday, March 13. “We must get the full accounting of what happened and why those responsible can be held accountable.”
Biden’s comments came hours after the Federal Deposit Insurance Corp. (FDIC) announced it had established a “bridge bank” to cover the deposits of Silicon Valley Bank (SVB) customers and followed a weekend in which federal regulators scrambled to deal with the fallout of SVB and Signature’s twin implosions.
Silicon Valley Bank, once among the 20 largest banks in the country, was taken over and shut down by the California Department of Financial Protection and Innovation last week after concerns about its liquidity and solvency following a run on deposits.
The state regulator turned over operations to the FDIC, leading to a weekend in which federal officials worked to find a buyer for the bank while also coming up with a plan to protect depositors. While that was happening, Signature Bank — a New York-based lender which had been trying to distance itself from the crypto industry — was also shuttered by regulators.
To prevent further failures, Biden said he would call on Congress and regulators to strengthen banking rules, which the president said were rolled back during the Trump administration.
Meanwhile, former President Trump deflected blame back to Biden, saying on his Truth Social platform that the bank failures were essentially the harbingers of a second Great Depression.
Biden aimed to reassure Americans Monday, saying they “can rest assured our banking system is safe. Your deposits are safe.”
He also stressed that the FDIC’s rescue plan for depositors does not use taxpayer money but rather the fees banks pay into the federal insurance fund. Investors, however, will not be protected, Biden added.
“They knowingly took a risk and when the risk didn’t pay off, investors lose their money, that’s how capitalism works,” he said.