WASHINGTON — President Joe Biden said that he will ask Congress and bank regulators to strengthen rules and oversight for banks to avoid further runs on banks and panic in the financial industry, like what was seen over the weekend.
Biden, speaking from the White House, said that deposits at American banks “will be there when you need them.” The remarks come after extraordinary action by U.S. banking regulators Sunday evening to stem deposits from leaving other banks en masse on Monday morning.
The regulators granted Signature Bank and Silicon Valley Bank a systemic risk exception which lets the Federal Deposit Insurance Corp. bail out uninsured depositors in both institutions using the agency’s Deposit Insurance Fund. That pot of money is funded by assessment fees levied on banks, and is typically meant to cover the insured deposits of failed institutions.
The unusual intervention from the federal government is expected to increase calls for oversight on the failed banks and other similarly sized and structured ones.
“We must get the full accounting of what happened and why,” Biden said. “Those responsible can be held accountable.”
Biden alluded to a 2018 law sponsored by then-Senate Banking Committee Chairman Mike Crapo, R-Idaho, and signed by former President Donald Trump that scaled back some rules for large regional banks. Biden called for those rules to be revisited, and for regulators to increase oversight.
“During the Obama-Biden administration, we put in place tough requirements on banks like Silicon Valley Bank and Signature Bank, including the Dodd-Frank law, to make sure that the crisis we saw in 2008 would not happen again,” he said. “Unfortunately, the last administration rolled back some of these requirements. I’m going to ask Congress and the banking regulators to strengthen the rules for banks to make it less likely this kind of failure will happen again.”