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WASHINGTON, March 27 (Reuters) - The U.S. government
will continue using its tools to prevent contagion in the
banking sector, as warranted, to ensure Americans' deposits are
safe, the Treasury undersecretary for domestic finance, Nellie
Liang, will tell the U.S. Congress on Tuesday.
In testimony prepared for the Senate Banking Committee,
Liang said decisive action taken by the federal government in
recent weeks had worked to restore public confidence, protect
depositors and bolster liquidity in the banking system.
"We continue to closely monitor developments across the
banking and financial system," Liang said in the remarks. "As
Secretary (Janet) Yellen has said, we have used important tools
to act quickly to prevent contagion. And they are tools we would
use again if warranted to ensure that Americans' deposits are
safe."
Investors have dumped banking stocks globally over the
past two weeks, with the Federal Reserve's rapid interest rate
hikes to rein in inflation blamed by some as the root cause of
the debacle.
Liang said recent developments were "very different"
from those during the global financial crisis of 2008-2009, when
many institutions came under stress because they held
low-quality credit assets.
The financial system was now "significantly stronger"
than 15 years ago, Liang said, given post-crisis reforms for
stronger capital and liquidity requirements.
She said she supported a Federal Reserve review of the
failures of Silicon Valley Bank and Signature Bank, and those
reviews would inform any regulatory and supervisory responses.
"We must ensure that our bank regulatory policies and
supervision are appropriate for the risks and challenges that
banks face today," she said, underscoring the importance of a
diverse and dynamic banking system.
(Reporting by Andrea Shalal and David Lawder; Editing by Sandra
Maler and Leslie Adler)
