U.S. Treasury Secretary Janet Yellen said Thursday that the federal emergency actions to protect Silicon Valley Bank and Signature Bank depositors could be implemented again, if necessary, as she sought to calm investors’ nerves amid mounting market fears over deposit outflows.
“We have used important tools to act quickly to prevent contagion. And they are tools we could use again,” Yellen said in written testimony before a House Appropriations subcommittee.
“The strong actions we have taken ensure that Americans’ deposits are safe. Certainly, we would be prepared to take additional actions if warranted,” she added.
For the past two weeks, investors around the world have sold banking equities, with some criticizing the quick increase in interest rates taken to combat inflation.
Yellen’s testimony was given as market concerns over the federal government’s commitment to backstop small and medium-sized regional banks increased following the SVB collapse, with questions centering on whether the federal government is prepared to backup these financial institutions in the event of a run.
On Wednesday, Yellen told lawmakers she has not considered or discussed providing “blanket insurance” to U.S. banking deposits without approval from Congress in an effort to cool the market down following the collapse of two large banks this month.
