U.S. Treasury secretary Janet Yellen initiated an unscheduled Financial Stability Oversight Council (FSOC) meeting with the country’s top financial regulators on Friday amid issues plaguing the U.S. banking sector. Banking stocks and all four U.S. benchmark indexes fell again on Friday as the government’s efforts last week failed to quell the country’s financial calamity.
Janet Yellen Initiates Unscheduled Meeting With Country’s Top Financial Regulators
The U.S. banking sector remains in turmoil following the collapse of three major banks two weeks ago and the federal government’s measures to address the issues. On Friday afternoon, the four primary U.S. benchmark stock indexes are flat, and bank stocks from institutions like Truist, First Republic, Pacwest Bancorp, and Western Alliance Bancorp have dropped lower than the previous day’s close.
A report from Bloomberg states that U.S. Treasury secretary Janet Yellen has scheduled an unscheduled meeting with the country’s top financial executives and the FSOC. Yellen’s surprise meeting with the FSOC follows her recent commentary, where she said that the government’s recent intervention with Silicon Valley Bank and Signature Bank “was necessary to protect the broader U.S. banking system.” In a speech given to the American Bankers Association, Yellen further emphasized that “similar actions could be warranted.”
In the report by Bloomberg’s Christopher Condon, the meeting between Secretary Yellen and the FSOC is closed to the public, and the time of the event has not been disclosed. It is unclear what will come out of the meeting. Yellen also addressed the issue at the Senate Appropriations subcommittee, where she noted that Congress should review the Federal Deposit Insurance Corporation’s (FDIC) insurance methods. However, Yellen emphasized that she has “not considered or discussed anything having to do with blanket insurance or guarantees of deposits.”
Yellen stated that decisions would likely be made on a case-by-case basis if other banks fail and are deemed a “systemic risk exception.” She added that “we are likely to invoke the systemic risk exception, which permits the FDIC to protect all depositors, and that would be a case-by-case determination.” The unscheduled meeting with Yellen and the FSOC on Friday will include members of the U.S. Federal Reserve and several other financial regulatory agencies.
What are your thoughts on the government’s recent interventions in the banking sector, and do you believe that they will be effective in stabilizing the system? Share your thoughts about this subject in the comments section below.