Treasury Secretary Janet Yellen is poised to raise hopes for more official support for U.S. banks. as informed in his speech which discussed the importance of medium-sized banks in particular.
Based on the text of the speech, Yellen will defend the need for significant steps to be taken to support Silicon Valley Bank following its collapse earlier this month, after being heavily run by its depositors.
"Similar actions can be taken if smaller institutions experience the same situation and can create a risk of contagion", said Yellen.
The Treasury Department has stepped in along with the Federal Reserve and the Federal Deposit Insurance Corporation to guarantee all SVB deposits after it failed earlier this month. However, that was not enough to stop a sharp fall in the share price of other mid-sized banks.
The remarks came a day after there were reports that Treasury officials were looking for ways to extend full insurance of bank deposits systemwide, at least temporarily, while a more durable solution to the regional bank problem is found.
The SVB crisis has triggered sharp falls in several medium-sized banks in recent days, most notably First Republic Bank. This was exacerbated by the hasty rescue of Credit Suisse by the Swiss authorities over the weekend. However, almost all of them have shown signs of stabilization today.
