Following the collapse of several major banks in the US, President Joe Biden has assured the public that the country’s banking system remains sturdy. Biden’s statements come after the California financial regulators seized First Republic Bank and sold it to JPMorgan Chase, which pledged to cover all deposits, including the uninsured. The President praised regulators for taking swift action to protect depositors and taxpayers, emphasizing that small businesses across the country would continue to receive support.
However, some have criticized US Treasury Secretary Janet Yellen's handling of the crisis, particularly regarding First Republic Bank's collapse. Yellen has warned of a national debt default, a concern echoed by Biden during his press conference on the matter. Republican lawmakers have refused to increase the country's debt limit unless the Inflation Reduction Act is repealed, heightening fears of financial instability and recession in the United States.
The collapse of First Republic Bank could also trigger a broader financial crisis in the country, potentially affecting the real estate market and other related industries, which could have significant implications for the world economy. Ruslan Lienkha, the chief of markets at Youhodler, an international fintech platform based in Switzerland, has expressed concern that the bank's failure may not be the last one, particularly given the impact of Federal Reserve rate hikes on small and mid-sized banks in the US.
As the US government continues to navigate the ongoing banking crisis and debt default concerns, global financial markets are closely monitoring developments in the world's largest economy.
