Treasury Secretary Yellen Holds Unscheduled Meeting With Top Financial Regulators – As a result of the failure of three major banks two weeks ago and the actions taken by the federal government to address the issues, the banking sector in the United States is still in a state of chaos.
Bank stocks from organizations such as Truist, First Republic, Pacwest Bancorp, and Western Alliance Bancorp are lower than the previous day’s closing on Friday afternoon. Bloomberg reports that U.S. Treasury Secretary Janet Yellen has organized an impromptu meeting with the country’s top banking executives and the Financial Stability Oversight Council (FSOC).
Yellen’s surprise meeting with the FSOC follows her recent comments in which she stated that the government’s recent intervention with Silicon Valley Bank and Signature Bank “was necessary to protect the broader U.S. banking system.” Yellen stressed in a speech to the American Bankers Association that “similar actions could be warranted.”
According to a report by Christopher Condon of Bloomberg, the meeting between Secretary Yellen and the FSOC is closed to the public, and the exact time of the event is unknown. It is unclear what will come out of the meeting. Yellen also addressed the issue at the Senate Appropriations subcommittee, where she noted that Congress should review the Federal Deposit Insurance Corporation’s (FDIC) insurance methods.
However, Yellen emphasized that she has “not considered or discussed anything having to do with blanket insurance or guarantees of deposits.” Yellen stated that decisions would likely be made on a case-by-case basis if other banks fail and are deemed a “systemic risk exception.”
She added that “we are likely to invoke the systemic risk exception, which permits the FDIC to protect all depositors, and that would be a case-by-case determination.” The unscheduled meeting with Yellen and the FSOC on Friday will include members of the U.S. Federal Reserve and several other financial regulatory agencies.