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Yellen tells senators US banking system “remains sound“

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U.S. Treasury Secretary Janet Yellen attends a U.S. House Ways and Means Committee hearing on President Joe Biden’s fiscal year 2024 Budget Request on Capitol Hill in Washington, U.S., March 10, 2023. REUTERS/Evelyn Hockstein/File Photo

The U.S. banking system remains sound and Americans can feel confident that their deposits will be there when needed, U.S. Treasury Secretary Janet Yellen will tell the Senate Finance Committee on Thursday.

In remarks prepared for a budget hearing, Yellen said “decisive and forceful” actions taken this week by the U.S. government to shore up public confidence in the banking system after the collapse of Silicon Valley Bank (SIVB.O) underscored its resolve to protect depositors.

“I can reassure the members of the committee that our banking system remains sound, and that Americans can feel confident that their deposits will be there when they need them,” Yellen said in the remarks.

“This week’s actions demonstrate our resolute commitment to ensure that depositors’ savings remain safe.”

She made no reference in the prepared remarks to the situation surrounding Credit Suisse, which saw its shares plunge on Wednesday before regulators pledged a liquidity lifeline to the flagship Swiss lender.

Treasury, the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) announced a series of emergency measures on Sunday after the failures of California-based Silicon Valley Bank and New York-based Signature Bank threatened to trigger a broader financial crisis.

Yellen said Treasury worked with the Fed and the FDIC to protect all depositors of both banks and set up a new facility to give banks access to emergency funds. The Federal Reserve also made it easier for banks to borrow from it in emergencies.

“Shareholders and debtholders are not being protected by the government. Importantly, no taxpayer money is being used or put at risk with this action,” she told the committee.

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