Supervisor Elham AbolFateh
Editor in Chief Mohamed Wadie

US Treasury Secretary Considers Possibility of other Banks Declaring Bankruptcy

Fri 17 Mar 2023 | 03:25 AM
Taarek Refaat

US Treasury Secretary Janet Yellen confirmed that the government considers the possibility that other US banks will declare bankruptcy after the "Silicon Valley" bank,  after being exposed to huge withdrawals from their customers' accounts.

Yellen commented in a hearing of the US Senate Finance Committee, on the possibility of a repeat of the situation that happened with the "Silicon Valley Bank", which faced huge withdrawals of customers that led to its bankruptcy, describing it as "systemic risk."

"The possibility of this spreading in such a way that other banks will suffer mass withdrawals from accounts seems very high, and the consequences will be very dire," she said.

The treasury secretary explained that the Washington administration over the weekend assessed "this grave danger" and decided to provide access to all depositors to their accounts as of March 13, "so that this does not cause the collapse of many banks and panic."

She expressed concern that "banks will tighten lending conditions," which could lead to a decline in economic growth.

And she added that the US authorities "are now focused on stabilizing the banking system and building confidence."

Commenting on the reasons for the bankruptcy of "Silicon Valley Bank", Yellen stressed: "It is important for regulators to look at what happened in this bank, it is already clear that the high level of uninsured deposits made it vulnerable to sudden large withdrawals from customers."