Banking Crisis: Threat on small banks persists, serious questions raised on Federal Reserve and Biden administration, 110 banks may be in trouble
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The shadow of such a crisis is visible on other banks of America as well. It is feared that after Silicon Valley and Signature Bank, America’s banking crisis may be widespread.
There has been a stir in America’s banking sector once again. The reason is financial crises means financial crisis. Within the last one week, two big banks of America have been locked. First the Silicon Valley Bank of America was closed, after that now the Signature Bank has also been closed. Experts say that this has raised serious questions about the financial stability of America. The Biden administration took immediate steps to return the entire amount deposited in the SVB to the depositors. Although many critics have called it a bailout. The shadow of such a crisis is visible on other banks of America as well. It is feared that after Silicon Valley and Signature Bank, America’s banking crisis may be widespread. If the situation does not improve, then about 110 banks of America may get trapped in the crisis like Silicon Valley and Signature Bank.
things are getting stable
US Treasury Secretary Janet Yellen sought to allay fears raised by some bank failures, saying the US banking system remains sound and that overall conditions are now stabilising. Yellen tried to allay fears raised by the failure of some banks at an American Bankers Association event. However, he added that further such failures could pose a risk to financial stability.
Failure of the American Banking System
Silicon Valley Bank (SVB), based in Santa Clara, California, failed on March 10 after depositors fearful of the bank’s financial health rushed to withdraw their money. It was the second major bank failure in American history. A few days later, banking regulators declared New York-based Signature Bank a failure. All depositors of these two banks will be protected under the federal deposit insurance, the regulators said.
11 banks saved the First Republic from drowning
Last week, another bank had reached the brink of collapse. But 11 US banks together saved San Francisco-based First Republic Bank from drowning by investing $ 30 billion. In this situation, the US government has also swung into action and is trying to restore people’s trust in the banking system. The Department of Justice and the Securities Commission have opened investigations into the sinking of the SVB.
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