WASHINGTON \u2014 Treasury Secretary Janet L. Yellen expressed confidence in the nation\u2019s banks on Tuesday and said she was committed to keeping them sound, seeking to calm nerves as the U.S. financial system faces its worst turmoil in more than a decade.<\/p>\n
\u201cThe situation is stabilizing,\u201d Ms. Yellen said in prepared remarks to be delivered to the Washington meeting of the American Bankers Association, the industry\u2019s leading lobbying group. \u201cAnd the U.S. banking system remains sound.\u201d<\/p>\n
The comments come as government officials have been contemplating additional options to stem the flows of deposits out of small and medium-size banks, and as concerns grow that more will need to be done.<\/p>\n
Ms. Yellen said recent federal actions after the failure of Silicon Valley Bank and Signature Bank were intended to show that the Biden administration was dedicated to protecting the integrity of the system and ensuring that deposits were secure.<\/p>\n
In the past 10 days, federal regulators have used an emergency measure to guarantee the deposits of Silicon Valley Bank and Signature Bank, initiated a new Federal Reserve program to make sure other banks could secure funds to meet the needs of their depositors and coordinated with 11 big banks that deposited $30 billion into First Republic, a wobbly regional bank.<\/p>\n
\u201cThe situation demanded a swift response,\u201d Ms. Yellen is set to say. \u201cIn the days that followed, the federal government delivered just that: decisive and forceful actions to strengthen public confidence in the U.S. banking system and protect the American economy.\u201d<\/p>\n
Despite those efforts, the Fed\u2019s campaign to raise interest rates to tame inflation has exposed weaknesses in the balance sheets of regional banks, rattling investors and raising fears that deposits are not safe.<\/p>\n
The recent volatility has led to calls for a review of the nation\u2019s financial regulations and raised doubts about whether the existing methods of supervising banks are sufficient.<\/p>\n
The uncertainty about regional banks has also led to concerns that the industry will further consolidate among big banks.<\/p>\n
Ms. Yellen made clear on Tuesday that banks of all sizes are important, highlighting how smaller banks have close ties to communities and bring competition to the system.<\/p>\n
\u201cLarge banks play an important role in our economy, but so do small and midsized banks,\u201d Ms. Yellen plans to say. \u201cThese banks are heavily engaged in traditional banking services that provide vital credit and financial support to families and small businesses.\u201d<\/p>\n
The Treasury secretary added that the fortunes of the nation\u2019s banking system and its economy are inextricably tied.<\/p>\n
\u201cYou should rest assured that we will remain vigilant,\u201d Ms. Yellen plans to say.<\/p>\n