US Treasury looks to strengthen financial stability; big focus on smaller banks
2023.03.21 17:19
© Reuters. FILE PHOTO: Economist Adewale “Wally” Adeyemo listens to questions during his Senate Finance Committee nomination hearing to be Deputy Secretary of the Treasury in the Dirksen Senate Office Building, in Washington, D.C., U.S., February 23, 2021. Greg Nash
By Andrea Shalal
WASHINGTON (Reuters) -The U.S. Treasury is continuing to monitor the health of mid-sized and regional banks and is considering what steps can be taken to further strengthen the country’s financial stability, Deputy Treasury Secretary Wally Adeyemo said on Tuesday.
Adeyemo said “decisive action” taken by the Treasury, Federal Reserve and the Federal Deposit Insurance Corporation to protect depositors in Silicon Valley Bank and Signature Bank (NASDAQ:) and ensure liquidity for other banks had stabilized the banking system, but a review of the banks’ failures was in order.
“It’s … important that we review the failures of the two banks in question to ensure we have a set of rules and procedures for the banking system that continues to protect our economy and depositors across the country,” Adeyemo said at an event hosted by the U.S. Hispanic Chamber of Commerce.
“We of course continue to monitor the current situation and consider what steps can be taken to further strengthen America’s financial stability,” he said, without elaborating.
Adeyemo underscored the importance of small- and medium-sized community banks and minority-owned depository institutions for communities of color, given their strong track record in reaching underserved communities, and said the Biden administration was committed to protecting these institutions.
“We know that smaller banks – those that would have been at greatest risk absent the steps we took – play a critical role in providing access to capital in Hispanic communities and other communities of color,” he said.
Alice Rodriguez, who retired from JP Morgan Chase (NYSE:) in September and is the immediate past chair of the U.S. Hispanic Chamber of Commerce, welcomed the public support for community banks expressed by Adeyemo and Treasury Secretary Janet Yellen during separate comments to bankers in Washington.
“It’s really important – in order for minorities not to get really constrained on capital – for these institutions to continue to serve them. If the banks have challenges with outflows, they’re not going to be able to serve those communities,” Rodriguez told Reuters after a private meeting with Adeyemo and U.S. regional leaders attending the Hispanic business event.
She said federal, state and local officials should increase their outreach to shore up confidence in regional banks, adding, “The reality is there’s always trust issues with government, particularly in the minority community.”
