The US Treasury Department shared the text of Yellen’s speech at the American Bankers Association summit.

Saying they learned about two weeks ago that there were problems at the two banks that could have a significant impact on the banking system and the broader economy, Yellen said the situation requires a quick response and that the federal government has taken “decisive and “strong” steps to strengthen public confidence in the US banking system and protect the US economy.

Yellen noted that the government’s latest actions demonstrate its determination to take steps to ensure that depositors’ savings and the banking system remain safe.

SIMILAR ACTIONS MAY BE REQUIRED

Yellen recalled that they first worked with the US Federal Reserve (Fed) and the US Federal Deposit Insurance Corporation (FDIC) to protect all depositors in their Silicon Valley Bank and Signature Bank decisions, and said: “The steps we took were not focused on helping specific banks or classes of banks. Our intervention was necessary to protect the US banking system more broadly. Similar actions may be required if smaller institutions experience deposit outflows that pose a contagion risk.” she used the phrase.

“I think our actions reduce the risk of failure of another bank that could hurt the Deposit Insurance Fund,” Yellen said. she made the assessment of him.

‘THE US BANKING SYSTEM IS SOUND’

Recalling that they announced a new program to provide additional liquidity to the banking system, Yellen said the Fed’s new debt facility, the Bank Term Funding Program, is designed to help banks meet the needs of all depositors. .

“The situation is stabilizing and the US banking system remains intact. Fed facility and discount window lending works as intended to provide liquidity to the banking system. Massive outflows of deposits from regional banks have stabilized”. he used the phrase.

Noting that 11 banks, including major and some regional ones, provided $30 billion in deposits to First Republic Bank last week, Yellen said: “This support is a vote of confidence in our banking system.”

WE WILL CONTINUE TO BE CAREFUL

Emphasizing that a dynamic and diverse banking system is vitally important to the US economy, Yellen noted that small and midsize banks play as important a role in the US economy as large banks.

Noting that these banks increase competition in the banking industry and often have specific knowledge and experience regarding the communities in which they invest, Yellen said, “Treasury is committed to ensuring the continued health and competitiveness of our vibrant community and regional banking institutions. ”

Yellen, emphasizing that a safe and sound banking system is an integral part of the health of the US economy, stated that they are fully focused on doing their job and will remain prudent. (AA)