Tag: Yellen

No good options if Congress fails to raise the debt limit, Yellen says

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Once that date hits, “really that’s it,” Yellen said on “This Week.” “We have been using extraordinary measures for several months now, and our ability to do that is running out.”
The debate over the debt limit has left Democrats and Republicans in a deadlock, and so far neither side seems ready to budge. House Minority Leader Hakeem Jeffries said Sunday on NBC’s “Meet the Press” that Democrats are in “lockstep” with Biden, who has called for passing a clean debt ceiling, not tied to any of the spending cuts House Republicans proposed in the bill they passed last month.
Speaking on Fox News’ “Sunday Morning Futures With Maria Bartiromo,” Sen. Mike Lee (R-Utah) said a letter had been sent to Senate Majority Leader Chuck Schumer saying 43 Republicans backed House Republicans in saying they would not consent to passing a debt ceiling increase without “spending cuts and structural budget reform.” He said he expects Senate Republicans to stay united on the issue.
“As Kevin McCarthy, speaker of the House, meets with the White House, it’s imperative that he arrive in a position of negotiating power,” Lee said.
Should Congress fail to come to an agreement before the X date, some analysts have suggested that Biden could invoke the 14th Amendment, which confirms “the validity of the public debt,” to raise the ceiling unilaterally. Legal scholar Laurence H. Tribe wrote of that option in the New York Times on Sunday: “For a president to pick the lesser of two evils when no other option exists is the essence of constitutional leadership, not the action of a tyrant.”
But it’s an option Yellen doesn’t want to White House to have to consider.
“Look, all I want to say is that it’s Congress’s job to do this,” she said. “If they fail to do it, we will have an economic and financial catastrophe that will be of our own making and there is no action that President Biden and the U.S. Treasury can take to prevent that catastrophe.”
If Congress does fail to find common ground, “there are simply no good options,” Yellen said.

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( With inputs from : www.politico.com )

May 7, 2023
Yellen to meet with global regulators on banking turmoil

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The banking turmoil is just one of several big priorities that Treasury outlined in Secretary Janet Yellen’s agenda for the IMF-World Bank spring meetings, which begin Monday. | Andrew Harnik/AP Photo
Treasury Secretary Janet Yellen plans to tell financial regulators gathered in Washington this week that the U.S. banking system is on solid ground despite a string of failures that rattled global markets, a department official said Monday.
The banking turmoil is just one of several big priorities that Treasury outlined in Yellen’s agenda for the IMF-World Bank spring meetings, which begin Monday.
Yellen will hold a press conference at 11:30 a.m., Tuesday, amid meetings with world leaders related to bolstering the global economy, revamping the World Bank and similar institutions, pushing for World Bank nominee Ajay Banga, rallying allies on Russia sanctions and tackling the indebtedness of developing countries.
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( With inputs from : www.politico.com )

April 10, 2023
Yellen, Powell welcome Swiss bank deal as step toward market stability

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UBS said in a statement that it would pay the equivalent of $3.25 billion to buy Credit Suisse, in what will be a merger of two institutions considered important to the global financial system.
“With the takeover of Credit Suisse by UBS, a solution has been found to secure financial stability and protect the Swiss economy in this exceptional situation,” the Swiss National Bank said in its statement. It added that the deal was made possible with the support of the Swiss federal government, the Swiss Financial Market Supervisory Authority FINMA and the Swiss National Bank.
The Fed later also announced it would take steps to make it easier for five foreign central banks to exchange their currencies for dollars. The move, coordinated with the other central; banks including the European Central Bank, is aimed at easing strains in global funding markets.
Starting Monday, those currency swaps will happen daily rather than weekly.
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( With inputs from : www.politico.com )

March 20, 2023
Yellen seeks to calm lawmakers amid banking turmoil

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The Biden administration’s Sunday rescue plan for the Northern California bank’s customers, along with those of Signature — a New York institution that was shuttered that day — were essential for stemming a possible contagion that put “community banks across the country at great risk of runs,” Yellen said.
In her prepared testimony, the former Federal Reserve chair assured lawmakers that the banking system remains sound and that “Americans can feel confident that their deposits will be there when they need them.”
Still, lawmakers from both parties sounded alarms over the many failures that contributed to Silicon Valley Bank’s downfall.
“Nerves are certainly frayed at this moment,” Committee Chair Ron Wyden (D-Ore.) said at the start of the hearing.

Treasury Secretary Janet Yellen shakes hands with Senate Finance Committee Chair Ron Wyden (D-Ore.) after a hearing on President Biden’s fiscal year 2024 budget request on Capitol Hill March 16, 2023.
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Francis Chung/POLITICO
Markets have been jittery over the last week amid fears the crisis could spread beyond regional banks. Investors dumped shares of institutions that may be facing a financial crunch with rising interest rates. Moody’s earlier this week downgraded its outlook for the entire U.S. banking industry, citing a “rapid and substantial decline in bank depositor and investor confidence.”
The bank run that sparked Silicon Valley Bank’s collapse on Friday left thousands of depositors — an overwhelming majority of whom weren’t covered by the FDIC’s deposit insurance limit of $250,000 — panicked that they wouldn’t be able to access their funds when banks opened on Monday morning.
Republicans who have scrambled to chart a united response to the Biden administration’s handling of the crisis criticized regulators for failing to intervene.
Sen. Tim Scott, a South Carolina Republican and possible 2024 presidential candidate, said a “lax regulatory environment” and deficient bank examiners allowed the failures of the SVB’s management team to slip through the cracks. Others, like Sen. Chuck Grassley (R-Iowa), said the implosion was a byproduct of a Biden-era economy that’s been stymied by soaring inflation and rising interest rates.

Yellen bristled at questions from Sens. James Lankford (R-Okla.) and Marsha Blackburn (R-Tenn.) about the potential long-term consequences of the rescue plan. The plan backstopped the banks’ uninsured depositors and made cash loans from the Fed available to lenders in exchange for safe collateral — an action that in theory would allow banks to handle deposit withdrawals of any amount for up to a year.
While Democrats are also urging federal agencies to examine regulatory shortfalls, many have also seized on the crisis as an opportunity to toughen standards around capital requirements and oversight.
“We certainly need to analyze carefully what happened to trigger these bank failures and reexamine our rules and supervision and make sure they’re appropriate for the risks banks face,” Yellen said.
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( With inputs from : www.politico.com )

March 16, 2023
US Treasury Secretary Yellen rules out bailout for Silicon Valley Bank

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Washington: US Treasury Secretary Janet Yellen on Sunday said that the federal government will not provide a bailout for Silicon Valley Bank’s investors after the bank was abruptly shuttered, but said financial regulators are “concerned” about the impact to depositors and working to address their needs, media reports said.
“During the financial crisis, there were investors and owners of systemic large banks that were bailed out,” Yellen said in an interview, CBS News reported.
“And the reforms that have been put in place means that we’re not going to do that again. But we are concerned about depositors and are focused on trying to meet their needs.”
California regulators shut down the Silicon Valley Bank on Friday after depositors rushed to withdraw money last week amid concerns about its balance sheet. The Federal Deposit Insurance Corporation (FDIC) was appointed receiver, and regulators are working to find a buyer for the institution, which ranked as the 16th-largest bank in the US before its failure.
The collapse of the 40-year-old bank, which catered to the tech industry, is the largest of a financial institution since the failure of Washington Mutual in 2008.
President Joe Biden spoke to California Governor Gavin Newsom about Silicon Valley Bank and the federal response on Saturday, and the FDIC spoke to members of the California congressional delegation late Saturday night.
Yellen said that in the wake of Silicon Valley Bank’s failure, Treasury officials have been hearing from depositors, many of which are small businesses, and she has been working with bank regulators to “design appropriate policies” to address the situation, though she declined to provide further details.
The FDIC, she said, is likely considering a “range of available options” to stabilise the situation, which could include an acquisition by a foreign bank, CBS News reported.

“The American banking system is really safe and well-capitalised. It’s resilient,” she said. “In the aftermath of the 2008 financial crisis, new controls were put in place, better capital and liquidity supervision, and it was tested during the early days of the pandemic and proved its resilience. So Americans can have confidence in the safety and soundness of our banking system.”
Still, Silicon Valley Bank’s shutdown has prompted nervousness about whether it could trigger a run on other small and regional banks. Yellen, though, said financial regulators are working to prevent the fallout from spreading to other institutions, CBS News reported.
“We want to make sure that the troubles that exist at one bank don’t create contagion to others that are sound,” she said. “The goal always of supervision and regulation is to make sure that contagion can’t occur.”
“We’re very aware of the problems that depositors will have,” Yellen said, CBS News reported. “Many of them are small businesses that employ people across the country, and of course this is a significant concern and [we’re] working with regulators to try to address these concerns.”
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( With inputs from www.siasat.com )

March 13, 2023
Federal bailout for Silicon Valley Bank off the table, Yellen says

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The bank had $209 billion in assets, and many of its depositors were Silicon Valley-backed startups and health-care businesses — many of them small businesses, Yellen said. Some have payrolls to meet this week.
But although the collapse is concerning, Yellen emphasized that the American banking system is “safe and well-capitalized” and “resilient.”
Americans “can have confidence in the safety and soundness of our banking system,” Yellen said Sunday.
“We want to make sure that the troubles that exist at one bank don’t create contagion to others that are sound,” Yellen added.
Although SVB’s failure is being compared to the financial crisis of 2008 that led to the collapse of hundreds of banks across the country, there’s reason to believe the government can steer the country away from a nation-wide fiscal emergency, Gary Cohn, former director of the National Economic Council said during an interview on CNN’s “State of the Union.”
“In 2008, the regulators did not have nearly as a robust toolbox that they have today,” Cohn said. “Today, the regulators have enormous tools at their disposal. They have enormous discretion to go through and really do whatever they want in this situation. … So, I’m cautiously optimistic that they will use their tools.”
Sen. Bob Menendez (D-N.J.), agreed that the government should avoid bailing out SVB’s investors. “I’m not ready to offer them a bailout by any stretch of the imagination,” he told NBC’s Chuck Todd during an interview on Meet the Press.
The best outcome would be for the Federal Deposit Insurance Corp. to find a buyer for the bank, Sen. Mark Warner (D-Va.), said Sunday.

“I’ve been in conversations with the regulators, the administration, the [Federal Reserve], the best outcome will be, can we — can they find a buyer for this SVB bank today before the markets open in Asia later in the day?” Warner, a member of the Banking Committee said during an interview on ABC’s “This Week.”
SVB’s collapse shouldn’t be seen as a sign that banks need to more regulation, Sen. Kevin Cramer (R-N.D.) said; it’s more likely a sign of mismanagement, he said during an interview on NBC’s “Meet the Press.”
Small banks “certainly don’t need any more regulation. That doesn’t mean that you can you can be mismanaged,” Cramer said. “Maybe better oversight, but certainly not more regulation.”
House Speaker Kevin McCarthy also addressed the bank’s failure Sunday, saying the federal government was working to come up with a solution before the markets open in Asia Sunday evening.
“I have talked with the administration from [Fed Chair] Jay Powell and Janet Yellen. They do have the tools to handle the current situation. They do know the seriousness of this, and they are working to try to come forward with some announcement before the markets open, McCarthy told Fox News’ Maria Bartiromo during an interview on “Sunday Morning Futures.”
“I’m hopeful that something can be announced today.”
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( With inputs from : www.politico.com )

March 12, 2023
Biden will back Ukraine for ‘as long as it takes,’ Yellen says in Kyiv

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“As you have said, our support is not ‘charity,’” Yellen told Zelenskyy. “It’s an ‘investment in global security and democracy.’”
Yellen’s trip comes a week after President Joe Biden made his own surprise visit to Kyiv, a show of support that marked the one-year anniversary of Russia’s unprovoked invasion of Ukraine.
On Friday, the U.S. announced a new $10 billion aid package to Ukraine to support energy and budget costs, as well as $2 billion in security assistance. The U.S. has so far provided Ukraine with close to $50 billion aid, Yellen said Monday in Kyiv.
“Just as your life is a part of the history of Ukraine – I believe that Ukraine is a central part of the history of the free world. And you are writing our history right now,” Yellen said. “As you do, I hope you know this: America stands with you in this fight for freedom. And we will be by your side to help you rebuild.”
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( With inputs from : www.politico.com )

February 27, 2023