US Treasury Secretary Janet Yellen said that the steps taken by American authorities in response to the Silicon Valley Bank collapse have helped stabilize the flow of money out of the banking system. In a recent interview with CNN, she emphasized that the government remains vigilant and the overall effort has calmed tensions across financial markets.
The Federal Reserve System, which has long served as the central bank for the United States, has indicated that the banking turmoil is likely to influence the economy for some time. Analysts and policymakers expect the fallout to shape economic activity into 2023, with some foreseeing a slowdown that could amount to a recession if the conditions persist or worsen. This view reflects a cautious stance about credit conditions, business investment, and consumer spending in the months ahead.
Nouriel Roubini, a renowned economist who warned about serious risks prior to the 2008 financial crisis, has warned that the U.S. banking system is facing significant stress and could edge toward further instability. His assessment underscores concerns about the resilience of financial institutions and the potential need for stronger safeguards to prevent future disruptions from spreading through the economy.
Additionally, the Biden administration is pressing for tighter regulatory oversight from the Federal Reserve System, especially for mid-sized banks whose assets have expanded from about 100 billion dollars to roughly 250 billion. The aim is to close gaps in supervision and reduce the likelihood of abrupt failures that could ripple through markets and communities nationwide.
Earlier in March, the Federal Deposit Insurance Corporation announced the bankruptcy of Silicon Valley Bank, a major American investment bank that ranked among the top assets holders in the country. SVB’s failure represents the largest collapse of a U.S. bank in more than a decade and a half, prompting reviews of risk controls, liquidity buffers, and the overall stability framework that supports the banking system. Observers say the incident has prompted a broader examination of how regional and midsize banks are monitored, funded, and stress-tested to ensure resilience in the face of rapid shifts in funding and depositor confidence.