US regulators say banking system ‘sound and robust’

WASHINGTON, March 24 (Reuters) – The U.S. Financial Supervisory Board of several regulators agreed on Friday that the U.S. banking system remains “healthy and resilient” despite stress on some institutions, the U.S. Treasury Department said in its latest statement to reassure jittery markets and bank depositors.

In a readout of a closed-door meeting chaired by Treasury Secretary Janet Yellen, the department said FSOC participants heard a presentation on market developments from employees of the Federal Reserve Bank of New York.

“The council discussed current conditions in the banking sector and noted that while some institutions have come under stress, the US banking system remains healthy and resilient,” the Treasury Department said in a statement.

The video conference meeting came as markets continued to rumble amid concerns that a two-week-old banking crisis triggered by the failures of Silicon Valley Bank ( SIVB.O ) and Signature Bank ( SBNY.O ) could worsen, sparking more runs on smaller banks

The body of financial regulators, chaired by Yellen and including the heads of the Federal Reserve, the Federal Deposit Insurance Corp (FDIC), the Office of the Comptroller of the Currency, the Securities and Exchange Commission and other regulatory agencies, last met on March 12.

It was the same day that the FDIC, Fed and Treasury announced emergency measures to stop all deposits at the two failed banks and create a new Fed lending facility to increase liquidity for all banks.

Two prominent House Republicans on Friday demanded that Yellen provide them with additional information about the March 12 meeting, including unredacted minutes, votes, timing details and bank stress test results.

“The events of the past 12 days related to both Silicon Valley Bank and Signature Bank, the resulting market volatility and your role raise a number of questions for policymakers,” Reps. Bill Huizenga and Andy Barr, who chair the House Financial Services Subcommittee, wrote in a letter to Yellen.

They added that the basis for the Treasury, Fed and FDIC rulings in the SVB and Signature cases “is of particular importance.”

Friday’s FSOC meeting came as fears of global banking contagion again sent European bank shares sharply lower, with Deutsche Bank and UBS hammered by concerns that regulators and central banks have yet to contain the worst shock to the sector since the 2008 global financial crisis.

But on Wall Street, stocks rebounded from an earlier selloff as three Federal Reserve bank presidents said in separate remarks that there was no indication that economic stress was worsening this week, allowing them to raise interest rates by a quarter of a percentage point.

Yellen again sought to calm fears of further bank deposits on Thursday, telling US lawmakers she was prepared to repeat actions taken in Silicon Valley and the failure of Signature Bank to secure uninsured bank deposits whose failure threatened more deposit runs.

These actions to invoke “systemic risk exemptions” were taken by Yellen, President Joe Biden, the FDIC and the Fed, which oversees Silicon Valley and Signature.

Reporting by David Lawder; additional reporting by Pete Schroeder; Editing by Diane Craft and Marguerita Choy

Our standards: Thomson Reuters Trust Principles.

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