WASHINGTON, March 24 (Reuters) – The multi-regulator U.S. Monetary Stability Oversight Council agreed on Friday that the U.S. banking system stays “sound and resilient” regardless of stress on some establishments, the U.S. Treasury mentioned in its newest assertion to calm jittery markets and financial institution depositors.
In a readout of a closed assembly chaired by Treasury Secretary Janet Yellen, the division mentioned that FSOC individuals heard a presentation on market developments from the employees of the Federal Reserve Financial institution of New York.
“The Council mentioned present circumstances within the banking sector and famous that whereas some establishments have come underneath stress, the U.S. banking system stays sound and resilient,” the Treasury mentioned in an announcement.
The videoconference assembly got here as markets continued to seesaw amid issues {that a} two-week-old banking disaster sparked by the failures of Silicon Valley Financial institution (SIVB.O) and Signature Financial institution (SBNY.O) might worsen, spreading extra runs on smaller banks
The physique of economic regulators, led by Yellen and together with the heads of the Federal Reserve, the Federal Deposit Insurance coverage Corp (FDIC), the Workplace of the Comptroller of the Forex, the Securities and Change Fee and different regulatory businesses, final met on March 12.
That was the identical day that the FDIC, Fed and Treasury introduced emergency actions to backstop all deposits within the two failed banks and create a brand new Fed lending facility to spice up liquidity for all banks.
Two outstanding Home of Representatives Republicans on Friday demanded that Yellen present them with extra details about the March 12 assembly, together with unredacted minutes, votes, particulars on timing and financial institution stress check outcomes.
“The occasions which have transpired over the past 12 days associated to each Silicon Valley Financial institution and Signature Financial institution, the following market instability, and your position increase plenty of questions for policymakers,” wrote Representatives Invoice Huizenga and Andy Barr who chair Home Monetary Providers subcommittees, in a letter to Yellen.
They added that the idea of the Treasury, Fed and FDIC determinations within the SVB and Signature circumstances “are of specific significance.”
The Friday FSOC assembly got here as international banking contagion fears once more triggered European financial institution shares to fall sharply, with Deutsche Financial institution and UBS knocked by worries that regulators and central banks haven’t but contained the worst shock to the sector for the reason that 2008 international monetary disaster.
However on Wall Avenue, shares recovered from an earlier sell-off as three Federal Reserve financial institution presidents mentioned in separate remarks that there was no indication that monetary stress was worsening this week, permitting them to boost rates of interest by 1 / 4 proportion level.
Yellen once more sought to calm fears of additional financial institution deposit runs on Thursday, telling U.S. lawmakers that she was ready to repeat actions taken within the Silicon Valley and Signature Financial institution failures to safeguard uninsured financial institution deposits if failures threatened extra deposit runs.
These actions to invoke “systemic threat exceptions” have been taken by Yellen, President Joe Biden, the FDIC, and the Fed, which supervised Silicon Valley and Signature.
Reporting by David Lawder; extra reporting by Pete Schroeder; Modifying by Diane Craft and Marguerita Choy
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