Financial Associated Press, Shanghai, March 25 (edited by Huang Junzhi)The U.S. Financial Stability Oversight Committee (FSOC) said after a meeting on Friday that the overall financial system remained sound despite pressure on individual banks, in a bid to reassure savers and investors unnerved by recent bank failures.
That morning, U.S. Treasury Secretary Janet Yellen urgently summoned the heads of major U.S. financial regulators for a closed-door meeting that was not scheduled in advance. FSOC is led by the Ministry of Finance and is responsible for identifying unstable factors in the financial system, regulating market discipline, and responding to potential risks. The members of this institution include the chairman of the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC).
In a statement after the meeting, the Treasury Department said: “The committee discussed the current state of the banking industry and noted that despite pressures on some institutions, the U.S. banking system remains strong and resilient. The committee also discussed Efforts to monitor financial developments.”
Investor confidence in some lenders has been waning despite policymakers from Washington to Frankfurt to Zurich declaring banks are well capitalized. California-based First Republic Bank lost almost half its market value this week, while shares of Deutsche Bank AG tumbled as much as 15% on Friday, the biggest drop since the pandemic hit in March 2020.
On the other hand, the latest data from the Federal Reserve on Friday also showed that regional and community banks lost $120 billion in deposits in the week ended March 15, while the 25 largest banks added deposits on a seasonally adjusted basis. $67 billion. Also, total industry deposits of $17.5 trillion were the lowest since September 2021.
In fact, since the Silicon Valley Bank (SVB) explosion and the banking crisis intensified, FSOC has faced more and more public opinion and pressure. They are demanding more clarity on whether they are willing to guarantee uninsured bank deposits.
Meanwhile, politicians have also demanded more information on what regulators are discussing. Top Republicans on the House Financial Services Committee on Thursday asked FSOC for details of a March 12 meeting when Yellen and her peers gathered to discuss a series of measures in the wake of SVB’s collapse.
Investors have also struggled to decipher information on the issue. But obviously, FSOC’s statement did not meet the requirements of the outside world. Former Treasury Secretary Lawrence Summers had earlier on Friday urged the FSOC to commit to backing uninsured deposits at any bank that fails over the next year.
“When it comes to protecting against bank runs, it’s better to go too far than to do too little,” he added.