Biden Tries to Reassure Markets After Two Historic Bank Failures Rattle Financial System

President Joe Biden sought to reassure markets in a Monday address after the historic failures of Silicon Valley Bank (SVB) and Signature Bank rattled the global financial system.


President Joe Biden sought to reassure markets in a Monday address after the historic failures of Silicon Valley Bank (SVB) and Signature Bank rattled the global financial system.

  • “Your deposits will be there when you need them,” Biden said while vowing to hold accountable the bank executives responsible for the demise of their institutions. Despite Biden’s reassurances, investors rushed to rid themselves of shares in bank stocks on Monday.
  • The White House is moving quickly to assure nervous businesses, banks, and citizens that the crisis is contained, the executives who caused the mess will be fired, and that deposits will be guaranteed without leaving taxpayers to foot the bill. It remains to be seen whether this will be enough to calm financial markets and prevent a full-scale panic.
  • Silicon Valley Bank’s collapse was directly linked to the Federal Reserve’s decision to raise interest rates. The rescue deal Biden announced will guarantee the deposits of all SVB and Signature Bank’s customers, an extraordinary backstop far beyond the $250,000 protected by the Federal Deposit Insurance Corporation (FDIC). Even so, US bank stocks continued to drop.
  • The expanded government FDIC backstop and a new Federal Reserve emergency lending program announced Sunday are intended to restore confidence in the financial system and prevent additional bank runs.
  • Asian markets contracted on Tuesday, with the benchmark stock indexes in Japan, South Korea, and Australia all taking hits despite their lack of exposure to regional US banks like SVB and Signature. The S&P 500 and the Dow Jones Industrial Average both fell on Monday, while the Nasdaq composite rose by 0.4% with banks and other financial companies suffering the biggest losses.
  • The failures of California-based Silicon Valley Bank and New York-based Signature bank are the the second- and third-largest bank collapses in US history – and both failed within just 48 hours of each other.


reporting from the left side of the aisle


  • CNN reported Silicon Valley Bank CEO Greg Becker’s “absolutely idiotic” decision-making, as one employee characterized it, is being blamed for allowing his company to collapse in the second-biggest US bank failure ever. Becker’s team revealed on Wednesday that they hoped to raise $2.25 billion in capital, but their transparency set off a panic in Silicon Valley, leading customers to pull $42 billion from the bank on Thursday alone before the government stepped in.
  • According to the Washington Post, Biden’s banking rescue “failed to quell doubts about the health of some midsize banks and left investors debating whether the Federal Reserve would be forced to change course in its fight against inflation.” The vulnerabilities exposed by the bank failures has led to “an extraordinary turnabout in financial conditions that has triggered a swift change in investor expectations of Fed interest rate actions.”
  • The New York Times covered the impact the bank collapses has had on regional lenders across the country. San Francisco’s First Republic Bank, Salt Lake City-based Zions Bank, and more than two dozen other banks’ stocks lost significant market value on Monday as medium-sized lenders try to ride out market turmoil and avoid becoming the next domino to fall.



  • The Wall Street Journal profiled Silicon Valley Bank CEO Greg Becker, a man who “projected optimism in a banking industry better known for caution.” Becker and his team “all but ignored” how rising interest rates changed the financial landscape for banks, betting that interest rates would fall, and their bank would survive in the interim. They were wrong.
  • While the banking crisis has led some members of Congress to focus on restoring stability in the financial system, Sen. Mark Kelly (D-AZ) reportedly suggested imposing social media censorship to try and stop a bank run by stifling free expression, according to Fox News. Kelly reportedly asked about censoring so-called “misinformation” during a congressional briefing call meant to get lawmakers up to speed on the banking crisis.
  • David L. Bahnsen wrote about the “real reason” SVB collapsed in a piece for National Review. “Aggressive interventions into the cost of capital distort our financial system, both with excessive accommodation and excessive tightening. The Fed’s role in SVB’s failure is not insignificant, and yet it will either be missed, or will be discussed incompletely. Their insistence on over-tightening now is a major policy mistake, but we must never forget that their first policy mistake was the “too low, too long” era. It was that era that gave us Silicon Valley Bank.”


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© Dominic Moore, 2023