The American banking system, threatened by severe turbulence. After the Silicon Valley Bank bankruptcy and Signature Bank, US President Joe Biden is due to speak on Monday to reure Americans about the banking system. “I will comment on how we will maintain a resilient banking system to protect our historic economic recovery,” he said in a White House statement late Sunday. “I am firmly determined to hold accountable those responsible for this mess,” he added.
On Sunday, the American authorities announced a series of measures to reure individuals and businesses. In particular, they will guarantee the withdrawal of all the deposits of the bankrupt bank Silicon Valley Bank (SVB) and allow access to all the deposits of another establishment, Signature Bank, which was automatically closed by the regulator, to everyone’s surprise.
A banking system under threat
The Federal Reserve (Fed) – the US central bank – has agreed to lend the necessary funds to other banks that need them to honor withdrawal requests from their customers. All of these measures testify to the turbulence that threatens the American banking system, disturbed by the Fed’s forced monetary tightening.
It has put pressure on bank margins, encouraged customers to invest their money in financial products that pay better than current accounts and has shaken up the cash-hungry new technology sector. The wave of withdrawals that followed caused the default of three banks this week, namely SVB, Signature Bank but also Silvergate Bank, smaller but known for its privileged links with the cryptocurrency community.
“The situation is not that of 2008”
After the announcement of the takeover of SVB by the Deposit Guarantee Agency (FDIC) on Friday, many had worried about the fate of deposits blocked by the failure of the establishment. Some 96% of them were, in fact, not covered by the traditional guarantee of deposits, which provides up to 250,000 dollars per customer and per bank. “The banking system is much more resilient and has a much better foundation than before the financial crisis,” insisted a Treasury official. “To be clear, the situation is not like 2008.”
At the same time, the American authorities put SVB up for auction with the aim of finding a buyer as soon as possible. The race against time initiated by the American authorities, however, recalls the weekend of September 13 and 14, 2008. They had then failed to find a buyer for the bank Lehman Brothers and refused to intervene, pushing it to file for bankruptcy on Monday , with dramatic consequences for the financial sector and the entire economy.