Treasury Secretary Janet Yellen Testifies on Biden Budget and Banking System’s Soundness
Treasury Secretary Janet Yellen appeared before the Senate Finance Committee on Thursday to testify on President Biden’s 2024 budget proposal, as well as to reassure legislators and citizens that the country’s banking system remains “sound” despite the recent collapse of the second largest bank in U.S. history.
The government’s response to the bank failure was “decisive and forceful actions to strengthen public confidence in our banking system”, said Yellen. This included fully guaranteeing all depositors in Silicon Valley Bank and Signature Bank.
Senator Mike Crapo, the committee’s ranking member, expressed concern about the precedent of guaranteeing all deposits and the market expectation moving forward. Yellen emphasized that no taxpayer money would be used or put at risk, and that deposit protection would be provided by the Deposit Insurance Fund, funded by fees on banks. She also discussed the steps taken to ensure customers had access to their funds and could pay payroll and bills.
Yellen also addressed the issue of inflation and its effects on the banking system. She acknowledged that rising interest rates and mismanaged interest rate risk had led to a liquidity crisis and said that more work needs to be done to address inflation.
In her closing remarks, Yellen urged Congress to come together and address the debt limit without conditions and without waiting until the last minute. She concluded that a default on the debt would trigger an economic and financial catastrophe.
0. “Treasury Secretary Yellen Testifies Before Congress in Wake of Bank Failures” C-SPAN , 16 Mar. 2023, https://www.c-span.org/video/?526623-1/treasury-secretary-yellen-testifies-president-bidens-2024-budget-proposal
1. “Treasury boss Yellen to say US banking system ‘remains sound' on Capitol Hill” New York Post , 16 Mar. 2023, https://nypost.com/2023/03/16/treasury-sec-yellen-to-say-us-banking-system-remains-sound-on-capitol-hill/
2. “Yellen seeks to reassure US legislators after bank collapse” Al Jazeera English, 16 Mar. 2023, https://www.aljazeera.com/news/2023/3/16/yellen-seeks-to-reassure-us-legislators-after-bank-collapse
3. “Treasury Secretary Yellen to tell Congress ‘our banking system remains sound'” Yahoo News, 16 Mar. 2023, https://news.yahoo.com/treasury-secretary-yellen-to-tell-congress-our-banking-system-remains-sound-110018961.html
4. “Janet Yellen: US banking system is ‘sound’ despite two collapses in a week” The Guardian, 16 Mar. 2023, https://www.theguardian.com/business/2023/mar/16/janet-yellen-us-banking-system-silicon-valley-signature-collapses
5. “Treasury Secretary Janet Yellen calls Republican plan to prioritize payments “default by another name” amid debt ceiling fight” CBS News, 10 Mar. 2023, https://www.cbsnews.com/news/janet-yellen-debt-ceiling-fight-republican-plan-prioritize-payments-default/
6. “Yellen, House Republicans spar over tax increases, debt limit” Roll Call , 10 Mar. 2023, https://www.rollcall.com/2023/03/10/yellen-house-republicans-spar-over-tax-increases-debt-limit/