Citigroup CEO says banking system ‘pretty sound’ after failures of Silicon Valley Bank, Signature Bank
A new poll shows as a mere 10% of US adults say they have high confidence in the nation’s banks and other financial institutions
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Independent Institute senior fellow Judy Shelton reacts to the banking failure and gives her take on the Fed's rate hikes on 'Making Money.'
Citigroup Inc CEO Jane Fraser argued Wednesday that the failures of Silicon Valley Bank and Signature Bank earlier this month are not a sign of wider problems within the banking system.
Speaking at the Economic Club of Washington D.C., Fraser said the "banking system is pretty sound," and large and regional banks are well-capitalized.
FILE: itigroup CEO Jane Fraser testifies before a Senate Banking, Housing, and Urban Affairs hearing on "Annual Oversight of the Nation's Largest Banks", on Capitol Hill in Washington, U.S., September 22, 2022. (REUTERS/Evelyn Hockstein / Reuters Photos)
"This is not a credit crisis. This is a situation where it's a few banks that have some problems, and it's better to make sure that we nip that in the bud," she said.
Silicon Valley Bank, the nation’s 16th-largest, failed on March 10 after making risky bets in the bond market. Two days later, regulators closed New York-based Signature Bank, which had gotten involved in cryptocurrencies.
A week later, long-troubled Swiss bank Credit Suisse, was taken over by rival UBS Group. Amid these failures, America’s biggest lenders – including Citi – agreed to deposit $30 billion in beleaguered First Republic Bank to give it time for restructuring.
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The rescue efforts failed to stop a 15% plunge in First Republic's shares on Wednesday.
Fraser said the quick action by U.S. regulators to stop the bank runs that toppled Silicon Valley Bank and Signature Bank helped to stop the problem from worsening.
"It's very important to protect depositors," Fraser said. "The banking system everywhere around the world depends on confidence, and that confidence has to be in the safety and security of deposits," she said.
Despite her optimism, her comments come as a mere 10% of U.S. adults say they have high confidence in the nation’s banks and other financial institutions – down from 22% in 2020.
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Following the collapse of Silicon Valley Bank, a poll from The Associated Press-NORC Center for Public Affairs Research finds that a majority say the government is not doing enough to regulate the industry.
The Associated Press and Reuters contributed to this report.