The multi-regulator U.S. Financial Stability Oversight Council agreed on Friday that the U.S. banking system remains "sound and resilient" despite stress on some institutions, the U.S. Treasury said in its latest statement to calm jittery markets and bank depositors.
In a readout of a closed meeting chaired by Treasury
Secretary Janet Yellen, the department said that FSOC
participants heard a presentation on market developments from
the staff of the Federal Reserve Bank of New York.
"The Council discussed current conditions in the banking sector and noted that while some institutions have come under stress, the U.S. banking system remains sound and resilient," the Treasury said in a statement.
The videoconference meeting came as markets continued to
seesaw amid concerns that a two-week-old banking crisis sparked
by the failures of Silicon Valley Bank and Signature
Bank could worsen, spreading more runs on smaller banks
The body of financial regulators, led by Yellen and
including the heads of the Federal Reserve, the Federal Deposit
Insurance Corp (FDIC), the Office of the Comptroller of the
Currency, the Securities and Exchange Commission and other
regulatory agencies, last met on March 12.
That was the same day that the FDIC, Fed and Treasury
announced emergency actions to backstop all deposits in the two
failed banks and create a new Fed lending facility to boost
liquidity for all banks.
Two prominent House of Representatives Republicans on Friday demanded that Yellen provide them with additional information about the March 12 meeting, including unredacted minutes, votes, details on timing and bank stress test results. "The events that have transpired over the last 12 days related to both Silicon Valley Bank and Signature Bank, the ensuing market instability, and your role raise a number of questions for policymakers," wrote Representatives Bill Huizenga and Andy Barr who chair House Financial Services subcommittees, in a letter to Yellen.
They added that the basis of the Treasury, Fed and FDIC
determinations in the SVB and Signature cases "are of particular
importance."
The Friday FSOC meeting came as global banking contagion
fears again caused European bank stocks to fall sharply, with
Deutsche Bank and UBS knocked by worries that regulators and
central banks have not yet contained the worst shock to the
sector since the 2008 global financial crisis.
But on Wall Street, shares recovered from an earlier
sell-off as three Federal Reserve bank presidents said in
separate remarks that there was no indication that financial
stress was worsening this week, allowing them to raise interest
rates by a quarter percentage point.
Yellen again sought to calm fears of further bank deposit
runs on Thursday, telling U.S. lawmakers that she was prepared
to repeat actions taken in the Silicon Valley and Signature Bank
failures to safeguard uninsured bank deposits if failures
threatened more deposit runs.
Those actions to invoke "systemic risk exceptions" were
taken by Yellen, President Joe Biden, the FDIC, and the Fed,
which supervised Silicon Valley and Signature.
(Reporting by David Lawder; additional reporting by Pete
Schroeder; Editing by Diane Craft and Marguerita Choy)
