A week after the second-largest bank collapse in U.S. history, Treasury Secretary Janet Yellen told the Senate Finance Committee on Thursday that the nation's banking system “remains sound” and Americans 'can feel confident” about their deposits.
Thursday's hearing, meant to address President Joe Biden's budget proposal, comes after the sudden collapse of the nation’s 16th-biggest bank and go-to financial institution for tech entrepreneurs. While Yellen prepared to talk about spending proposals, the hearing inevitably turned to the government's decision-making process to intervene in the bank failure.
Mike Crapo of Idaho, the committee's top Republican, said, “I’m concerned about the precedent of guaranteeing all deposits,” calling the federal rescue action a “moral hazard." Yellen, a former Federal Reserve chair and past president of the San Francisco Federal Reserve during the 2008 financial crisis, was a leading figure in the resolution this past weekend, which was engineered to prevent a wider systemic problem in the banking sector.
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