Treasury Secretary Janet Yellen says liquidity played an important role in the failures of Silicon Valley Bank and Signature Bank. She says the administration needs to examine what happened. She is questioned by Democratic Senator Elizabeth Warren during a Senate Finance Committee hearing.
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Janet Yellen, the former Chair of the Federal Reserve, recently spoke out about the role of liquidity in bank failures. In an interview with The Wall Street Journal, Yellen highlighted the importance of having adequate liquidity in order to prevent banks from collapsing.
According to Yellen, lack of liquidity was a major contributing factor to the 2008 financial crisis. During that time, many banks were holding large amounts of illiquid assets, such as mortgage-backed securities, which were difficult to sell on short notice. This made it challenging for banks to meet their financial obligations when investors began to withdraw their money.
Yellen argued that if these banks had more liquid assets, they could have easily sold them to raise cash and avoid insolvency. She also emphasized the importance of having a robust system in place for managing liquidity. This would include ensuring that banks have enough cash on hand to meet their immediate needs, as well as having access to emergency sources of funding.
Yellen’s comments come at a particularly relevant time, as the COVID-19 pandemic has put a strain on many banks’ liquidity. Many businesses have closed, leading to a decrease in cash flow for banks. Additionally, many individuals have pulled their money out of banks in response to the economic uncertainty caused by the pandemic.
To address this issue, the Federal Reserve has implemented various measures to increase liquidity in the banking system. For example, they have lowered interest rates and provided emergency funding to banks through the Paycheck Protection Program (PPP) and other programs.
Despite these efforts, Yellen warns that the issue of liquidity should not be taken lightly. She points out that many banks are still holding large amounts of illiquid assets, and that there is a risk of another financial crisis if these issues are not addressed.
Overall, Yellen’s statements serve as a reminder of the importance of liquidity in the banking system. By ensuring that banks have adequate access to cash and emergency funding, we can help prevent bank failures and the economic turmoil that comes with them.
Banks are getting their structural integrity subsidized by the US taxpayers. This is be.
So if MY BUSINESS fails, I am screwed could even go to prison if I deliberately do something wrong or just sheer repellence. But if a BANK DOES IT, its bail out bail out bail out? Ok.
Want to stop this in its tracks? Have the Fed undo the damage it has done and buy its bonds back at face value.
Get yellen out! She opens her mouth and says nothing.
Yellen is a major reason we are in this mess.
Liz pretending she ain't a big bankie bro. Gross.
What played role #1 was that when these SVB bank is playing liquidity problem, this management new darn well what situation they are in and why……AND YET !! in hurry they started to liquidate treasury bonds with lose because they started run not depositors …. they started run to steal money to by placing billions in the hands of they same crooks as they are to cut the pie after dust storm …
disgusting !
Now this government is robbing tax payers to please them so this silicon valley can handle propaganda for Biden !!!
Well…we know why this happened!! I was actually Democrat policies that created this firestorm! Also the people running the bank had no experience in the banking industry! The real kicker is, that they were democrats that had been put there! Seems to me more pay to play…money laundering…sounds like old Joes play book to me!!!
You want to stop this from happening again? Stop bailing out Banks!!!!!!! Is that simple!!!
democrats are CRIMINALS in GOVERNMENT 2023. more RULES for THEE but NOT for bidens admin democrats 2023
Yellen 2017 said: I Don't See a Financial Crisis Occurring 'In Our Lifetimes – she is clueless
both seem low iq
We gotta fox in the hen house folks. Wake up. Why is a Fed Chair running out Treasury?!
Do we still think Bitcoin is risky? People forgot that banks fail. People can't remember 15 years ago.
I heard large banks still only need around 5 to 10 percent liquidity. They used to have far more. Maybe we should go back to measuring the value of currencies in silver sterling or clean water. Speculation of the stock market on things that haven't even happened and not enough investment in necessary things are some of the many problems.
Ironic, culprits of the mess asking for more controls and regulations. There goes the Republic!
Yellen claims inflation is transitory and the banking system if strong. Lol.. I’m sure she thinks it’s a great time to buy a house too. What’s the old 80’s song.. lies lies lies yea!
Bunch of Cowboys, doesn't matter what side of the isle you reside.
WOW… Treasury Secretary Janet Yellen doesn't know how the banks are stress tested i.e., Stress tests focus on a few key areas, such as credit risk, market risk, and liquidity risk to measure the financial status of banks in a crisis. She stated the stress test does not test for liquidity.
So when the banks invest in higer risk loans, and donate 75M to BLM so they could buy mansions, that 75M is in effect tax payer's money. The intentional mis management was laundering cash to causes that neither the bank nor management take any responsibility what so ever. The money used for 'donations' should come out of pocket of the management and the board members payroll, not the tax payer.
An absence of Liquidity requires Credit . . .Inability to get Credit is . . . .?
LIQUIDITY IS NOT THE STRONG POINT OF ANY USA BANK !!!
This is all theater.
Omg this is a takeover of business, blatant communism.
You can regulate your way out of bad policy.
Elizabeth Warren and Janet Yellen are 2 of the most uninspiring people in the Democratic sphere. YUK!
No shit Sherlock! Any jacka$$ knows that when you print $10 trillion in 2 years with no plans to pay it back the $hit will hit the fan.
Thank u 2018. Tax. Act and bank deregulation. But students loans forgiveness is completely wrongful
Biden Bailed out his donors, and sacrificed the Average American to higher for longer inflation. When will SF Fed Barry step down?