Biden pledges 'whatever needed' for U.S. bank system
STORY: "Americans can have confidence that the banking system is safe. Your deposits will be there when you need them."
U.S. President Joe Biden on Monday sought to reassure Americans that the sudden collapse of two banks - including the largest bank failure since the 2008 financial crisis - did not threaten their savings, and that he stood ready to do "whatever is needed."
The morning address came after a weekend of emergency moves by U.S. regulators to guarantee all deposits at Silicon Valley Bank, which failed on Friday, and at Signature Bank, which was taken over by regulators on Sunday.
"All customers who had deposits in these banks can rest assured, rest assured they'll be protected and they'll have access to their money as of today."
But the dramatic moves failed to quash investor fears. Regional bank shares plunged in Monday trading: First Republic Bank dropped more than 65% as news of fresh financing failed to reassure investors. Western Alliance Bancorp fell nearly 76 percent.
Trading in the stocks was halted several times due to volatility.
The selloff comes after Biden drew a clear line between depositors, who would be protected, and bank investors, who would not:
"Investors in the banks will not be protected. They knowingly took a risk and when the risk didn't pay off, investors lose their money. That's how capitalism works."
The Federal Deposit Insurance Corporation or FDIC normally protects all bank accounts up to $250,000. But the Biden Administration announced it would protect all deposits for SVB and Signature depositors.
"No losses will be borne by the taxpayers, and we repeat that. No losses will be borne by the taxpayers. Instead, the money will come from the fees that banks pay into the deposit insurance fund."
Despite those assurances, clients raced down to Signature Bank to learn the fate of their finances:
"I'm coming here to see if I have to close my accounts or not. Hopefully the bank will be bought by another bank, and I can keep my accounts here. But if they're not, or if there's any question, I want to empty my accounts and bring it to another bank."
REPORTER: "Are you worried, sir?"
"Everyone should be worried."
This client expressed shock as he headed inside:
"I cannot believe it. This was something I did not expect."
A short while later he left, saying he'd been reassured:
"Everything is OK."
Biden on Monday said he would press Congress to strengthen bank regulations to better protect against these types of bank troubles.
The Democratic president blamed the partial repeal of regulations under the prior Republican administration.
In 2018, changes to the Dodd-Frank Act, pushed by Republicans, raised the threshold at which banks are considered systemically risky and subject to stricter oversight to $250 billion from $50 billion.
Silicon Valley bank had $209 billion in assets at the end of last year.