UnusualWhales

Yellen: Deposits in US. Banks will be guaranteed only if a systemic risk determination is issued.

Yellen said: “A bank only gets that treatment if a majority of the FDIC board, a supermajority of the Fed board, and I in consultation with the president, determine that the failure to protect uninsured depositors would create systemic risk and significant economic and financial consequences.”

“I can reassure the members of the committee that our banking system is sound and that Americans can feel confident that their deposits will be there when they need them,” Yellen said in her opening remarks. “This week’s actions demonstrate our resolute commitment to ensure that our financial system remains strong and depositors’ savings remain safe.”

“The government took decisive and forceful actions to strengthen public confidence in our banking system,” she said. “On Monday morning, customers were able to access all of the money in their deposit accounts so they could make payroll and pay the bills.”

“I don’t think that Congress should for a second contemplate the possibility of not raising the debt ceiling to pay our bills,” Yellen said.

“This is the cornerstone of what makes our financial markets the soundest invest in the world, and people trust that the government stands ready to pay its bills,” Yellen added, saying the knock-on effects of a possible default were “beyond contemplation”.