Yellen Seeks to Reassure Congress on Banks Amid Oversight Angst

Treasury Secretary Janet Yellen told Congress on Thursday that the US banking system remains sound, seeking to reassure lawmakers, depositors and investors amid concerns about how the sector is regulated.

Yellen, who’s appearing before the Senate Finance Committee in Washington, is among policy makers at the center of an emerging banking crisis. The hearing comes amid tumult in global markets and worries over financial stability after the rapid-fire collapse of three regional US banks and troubles at Credit Suisse Group AG.

The Treasury Department along with other regulators intervened in the collapse of Silicon Valley Bank “because of the recognition there can be contagion in situations like this and then other banks can then fall prey,” Yellen said. She added that her department will take a “careful look” at what happened to the bank.

While Yellen’s testimony was scheduled to discuss President Joe Biden’s 2024 budget, the recent events in the banking industry and subsequent action by US regulators is also a topic at the hearing.

US authorities took extraordinary steps last weekend to shore up confidence following the failure of SVB and Signature Bank, including a new backstop for lenders that Federal Reserve officials said was large enough to guarantee the nation’s deposits.

“We need to look into what the regulators do, exactly what happened to create the problems that these two banks that failed faced, and make sure that our regulatory system and supervision is appropriately geared so that banks manage their risks to avoid problems of the type that these banks have suffered from,” she said.