The US banking system remains healthy and Americans can feel confident that their deposits will be there when needed thanks to “decisive and forceful” actions taken after Silicon Valley Bank’s failure to prevent massive deposit withdrawals caused its collapse last week, he said today Treasury Secretary Janet Yellen.

In remarks to the Senate Finance Committee, Yellen said the emergency measures announced Sunday by the Treasury Department and other US regulators to boost public confidence in the banking system after the collapse of the Californian bank underscored the resolve of the US government to protect depositors.

“I can assure the members of the Committee that our banking system is sound and that Americans can feel confident that their deposits will be there when they need them,” emphasized the American minister.

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

US authorities said they wanted to protect the funds of Signature Bank and Silicon Valley Bank (SVB) depositors because there was a “serious risk of contagion”.

These were the minister’s first statements to federal lawmakers since the weekend’s emergency measures to support depositors and bolster banking sector liquidity were greeted with relief and surprise on Capitol Hill, where Democrats control the Senate and Republicans control the House. of Representatives.

Yellen also stressed that SVB’s collapse was essentially a failure to meet depositors’ demands for their money after the Federal Reserve’s (Fed) rate hikes last year eroded the value of the bond investments it relied on. to fund customer withdrawals. He also noted the high level of uninsured deposits in Silicon Valley as an aggravating factor.

“There was a liquidity risk in this situation”Yellen told the committee. “It will be looked closely at what happened to the bank and what started this problem, but clearly, the collapse of the bank, the reason it had to close, was that it could not meet depositor withdrawal requests.”

He made no mention of the situation surrounding Credit Suisse, which saw its shares sink on Wednesday before regulators pledged to provide liquidity to the top Swiss lender.

Yellen noted that she worked with the Fed and FDIC to protect all depositors of both banks and created 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 debtors are not protected by the government. It is important that taxpayers’ money is not used or put at risk by this action,” he told the Committee.