Treasury Secretary Yellen Holds Unscheduled Meeting With Top Financial Regulators Amid Turmoil in Banking Sector

US Treasury Secretary Yellen began an unscheduled Financial Stability Oversight Council (FSOC) meeting Friday amid problems in the US banking sector. Banking stocks and all four U.S. benchmark indices fell again Friday as government efforts made last week failed to quell the country’s financial crisis.

Janet Yellen began unscheduled meetings with financial regulators in various countries

The U.S. banking sector remains in turmoil following the collapse of three major banks two weeks ago and the federal government’s measures. On Friday afternoon, the four major U.S. benchmark stock indexes were flat, with institutional banking stocks such as Truist, First Republic, Pacwest Bancorp, and Western Alliance Bancorp down from the previous day’s close.

Bloomberg reportsthat U.S. Treasury Secretary Janet Yellen has scheduled an unscheduled meeting with top U.S. financial executives and the FSOC. Yellen’s surprise meeting with the FSOC follows her recent comments that the government’s recent intervention in Silicon Valley Bank and Signature Bank was necessary to “protect the broader U.S. banking system.” In a speech at the American Bankers Association, Yellen further emphasized that “similar measures could be justified.”

Bloomberg’s Christopher Condon reports that the meeting between Secretary Yellen and the FSOC was private and the time of the meeting was not disclosed. It is unclear what will come out of this meeting. Secretary Yellen also addressed the issue before the Senate Appropriations Subcommittee,notingthat Congress should review the Federal Deposit Insurance Corporation (FDIC) insurance formula. However, Yellen emphasized that “we have not considered or discussed anything having to do with comprehensive insurance or guarantee of deposits.”

Yellen said that if another bank fails and is determined to be a “systemic risk exception,” it will likely be determined on a case-by-case basis. She added, “It is likely that the FDIC would invoke a systemic risk exception that would allow the FDIC to protect all depositors, and that would be a case-by-case determination.” Friday’s unscheduled meeting between Yellen and the FSOC will also include members of the Federal Reserve and several other financial regulatory agencies.

What are your thoughts on the government’s recent intervention in the banking sector? And do you think it has been effective in stabilizing the system? Share your thoughts on this subject in the comments section below.

Image Credits: Shutterstock, Pixabay, Wiki Commons.