US banks are in good shape and no major crisis is on the horizon, Biden says

American government 'will protect deposits if banking turmoil persists'

US President Joe Biden in the House of Commons on Parliament Hill in Ottawa, Canada, on Friday. Bloomberg
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President Joe Biden said he was confident US regional banks were in good shape and didn’t foresee any major crises on the horizon, downplaying Wall Street angst and lingering fears of broader financial turmoil.

“I think we’ve done a pretty good job. People’s savings are secure,” Mr Biden said during a press conference on Friday in Ottawa alongside Canadian Prime Minister Justin Trudeau. “I think it’s going to take a little while for things to just calm down, but I don’t see anything that’s on the horizon that’s about to explode.”

In response to a question from a reporter about anxiety in financial markets, Mr Biden quipped, “You ever know a Wall Street not in consternation?”

The remarks were Mr Biden’s first on the banking crisis since a week earlier, as he seeks to pivot away from the issue in a bid to project stability and avoid spooking markets.

Mr Biden said that if the banking turmoil persisted the government is in a position to protect deposits.

“What we would is, if we find that it’s more instability than appears, we’d be in a position at the FDIC use the power it has to guarantee those loans above $250,000, like they did already,” he said referring to the Federal Deposit Insurance Corporation.

US regulators have come under pressure to offer more clarity about guaranteeing uninsured deposits.

Senator Elizabeth Warren has called for regulators to raise the guarantees on accounts above the current $250,000 threshold. Treasury Secretary Janet Yellen has said regulators aren’t looking to provide “blanket” deposit insurance without working with politicians.

Mr Biden last week expressed confidence worst of the turmoil roiling the US banking system had passed. And he has publicly punted the issue to Congress, encouraging politicians to approve tougher bank regulations and punishments for executives at banks that fail, including strengthening powers to claw back bonuses.

But regulators are still working to stabilise the sector after the collapse of Silicon Valley Bank and Signature Bank, and with worries about the health of another regional lender, First Republic Bank, despite already receiving a $30 billion lifeline.

Ms Yellen convened a previously unscheduled meeting of the Financial Stability Oversight Council on Friday, gathering together top US financial regulators.

The banking crunch was exacerbated by troubles at Credit Suisse Group, leading the Swiss government to broker a deal for its takeover by longtime rival UBS Group.

Markets were gripped by fresh volatility on Friday with the focus on Deutsche Bank, which saw its shares slump the most in three years.

Updated: March 25, 2023, 9:38 AM