The latest report from the cryptocurrency industry today says that Janet Yellen: the United States Treasury Secretary , entered an emergency meeting with the country’s major regulators. It was organized by the Financial Stability Oversight Council (FSOC). The reason for the meeting is said to border around the trembling United States banking system and to stop the flow of funds moving from small regional lenders in the United States.
This is happening at a time when their customers have developed a strong belief that they are too big to collapse. Another rumored motive for the emergency meeting is the sudden fall in the United States banking stocks and the benchmark index – this became very worrisome because there have been previous government interventions to curtail the declining U.S. banking sector.
From the information gathered, the last government intervention in that sector happened sometime last week. In a brief explanation gathered so far on the reason for the emergency meeting, the U.S. banking industry has remained in shambles lately, which can be seen in the collapse of major banks in the country.
It was reported on Friday that four major U.S. stock indexes went down, followed by stocks from known firms like PacWest Bancorp, Truist, Western Alliance Bancorp, and First Republic. All stocks of the previously mentioned firms were said to go flat, lower than what it was the previous day.
Yellen Further Clears The Air On The Unscheduled Meeting
Meanwhile, in one of their reports, Bloomberg confirmed that the United States Treasury Secretary indeed convened an emergency meeting with FSOC and prominent U.S. finance executives. They went ahead to disclose that the collapse of prominent financial institutions like the Silicon Valley Bank, Signature Bank as well as government interventions made up the major reason for the meeting.
According to a statement, Yellen, when contracted to speak on the situation, said that such a move was necessary to save the U.S. banking system and protect it from impending turmoil. Yellen had presented a speech to the American Bankers Association where she said that actions similar to the intervention given to financial institutions like Signature Bank and Silicone Valley Bank were necessary and will likely be repeated in the future should such a situation arise again.
According to Christopher Condon, a reporter from Blomberg revealed that the meeting between the FSOC and Yellen were done behind closed doors, so not much was known about the outcome of the arrangement. Condon also said the meeting details were so concealed that the exact time remains unknown.
It was also revealed that Yellen, during the meeting, sat with the Senate Appropriations subcommittee, where she suggested that Congress should revisit the Federal Deposit Insurance Corporation’s (FDIC) insurance strategy. She further stated that she has yet to discuss any topic that borders around either guarantee of deposits or blanket insurance.
Yellen Gives Further Details of The Meeting
While addressing journalists on the outcome of the meeting, Yellen assured that a detailed decision would be reached should banks collapse or are tagged (what she termed) “systemic risk exception.” She also added that her office might consider invoking the risk exception to secure the accounts of all customers of the affected banks.
In her statement, she said, “we are likely to apply the systemic risk exemption, which authorizes the FDIC to safeguard all depositors, which would require a case-by-case judgment.” Information also has it that the said meeting had the United States Federal Reserve and many other financial/economic regulatory agencies in attendance.
Yellen was also said to have assured the general public that there are modalities to bring back calm in the already tense U.S. financial system. She also emphasized the closure of Credit Suisse Group AG and the proposed handover to its new owners, UBS Group AAG.
The Financial Stability Oversight Council group includes the Federal Deposit Insurance Corporation, the chairman, the Federal Reserve, and many other regulatory authorities. And from the little known about these members, they have limited legal authority yet work as an organizing forum.