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After a series of bank collapses, worries about the US financial system have spread quickly, raising fears of a looming crisis. To quell panic over things happening around, US President Joe Biden has been forced to deliver an address to the nation, claiming that there is nothing to worry about.
Problems in the banking sector surfaced after Silicon Valley Bank had been shut down by California’s financial watchdog. Given the size of the financial institution, the event did not go unnoticed. Silicon Valley Bank has become the biggest bank to fail in the last 15 years since the 2008 financial crisis. SVB was not able to survive the Fed’s interest rate increases, which led to a balance sheet reduction. In addition, the bank came under pressure from the mass withdrawal of funds by depositors. The Federal Deposit Insurance Corporation (FDIC) said that all insured SVB deposits had been transferred to the recently established Deposit Insurance National Bank of Santa Clara. This in turn had a profound impact on the entire US banking system. The four largest US banks by assets – JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo – lost $52.4 billion in market value in one day. Jitters over the health of the US financial system sparked a major sell-off in the stock market, while depositors rushed to withdraw their money.
In an attempt to ease anxiety, the White House recorded a presidential address to ordinary Americans. US President Joe Biden tried to assure them that the country's banking system was secure, stressing that "every American should feel confident that their deposits will be there if and when they need them." "No losses will be borne by the taxpayers," he promised. The head of the state also added that "the management of these banks will be fired" and those responsible would be held accountable.
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