Mar 27, 2023
Treasury Official to Pledge Deposit Protections If Necessary
(Bloomberg) -- The US Treasury Department’s top domestic policy official will tell Congress regulators stand ready to repeat the extraordinary steps taken after recent bank failures, while noting that small- and mid-sized banks play a key role in the financial system.
“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,” Nellie Liang, undersecretary for domestic finance, will tell lawmakers Tuesday in a hearing about recent bank failures and the government’s regulatory response, according to a text of her prepared remarks released by the Treasury Department Monday evening.
Her pledge to repeat, if necessary, actions taken to rescue uninsured deposits at two mid-sized lenders that collapsed little more than two weeks ago came alongside an emphasis on smaller lenders.
“Small and mid-size banks, including community banks, serve a vital role in providing credit and financial support to families and small businesses,” she will say.
Liang will testify Tuesday along with the Fed’s chief of banking supervision, Vice Chair Michael Barr, and Martin Gruenberg, chair of the Federal Deposit Insurance Corp.
The collapse of California’s Silicon Valley Bank and New York’s Signature Bank sent tremors through financial markets and threatened to trigger wider bank runs at mid-sized lenders across the US.
Regulators have sought to stabilize the situation by guaranteeing uninsured deposits at the failed institutions and launching an emergency lending program for all banks at the Federal Reserve.
©2023 Bloomberg L.P.