The US President reacts to the collapse of the Silicon Valley Bank.
(Photo: AP)
Washington In view of the banking turmoil in the USA, US President Joe Biden wants stricter conditions for financial institutions and thus a reversal of the relaxations offered by his predecessor Donald Trump. Biden is therefore calling on the bank supervisory authorities, among other things, to increase the liquidity requirements for smaller banks, the White House announced on Thursday.
In addition, they should again have to undergo annual stress tests. This is to ensure that they have enough capital to absorb potential losses. In addition, the financial institutions should submit comprehensive resolution plans. These are intended to show that the banks would not endanger the banking system as a whole in the event of resolution.
“I want to emphasize that today’s announcement focuses on actions that can be implemented under existing law,” a US government official said. It does not require the approval of the US Congress.
The government has held talks with the responsible supervisory and regulatory authorities, especially in the past few weeks. The government representative did not say how receptive they were to the proposals. “We believe that the situation has stabilized significantly,” the representative continued. However, it is important that measures are taken to prevent future banking crises.
The trigger for the banking crisis at the beginning of March was the liquidation of the US financial group Silvergate Capital, which is geared towards the crypto industry. A few days later, the US money house Silicon Valley Bank, which specializes in start-up financing, was placed under the control of the US deposit insurance company FDIC and closed. Other small banks stumbled.
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In 2018, the US Congress cleared the way for a repeal of essential parts of the so-called Dodd-Frank Act, which was intended to prevent renewed bank failures after the 2008 financial crisis at the expense of taxpayers. Trump had promised the financial lobby to roll back the rules passed in 2010. While that didn’t happen entirely, conditions were eased for small and regional banks – which are now struggling.
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