Yellen Reaffirms Strength of US Banking System in Meeting with Bank CEOs -Treasury

By Pete Schroeder and Costas Pitas

13:10 JST, May 19, 2023

WASHINGTON, May 18 (Reuters) – U.S. Treasury Secretary Janet Yellen reaffirmed the strength and soundness of the country’s banking system in a meeting with bank CEOs on Thursday, a Treasury Department statement said.

During the meeting with more than two dozen CEOs and executives convened by the Bank Policy Institute, Yellen also discussed the “urgent need” for Congress to address the debt limit, the statement said.

Yellen’s meeting with bank executives came as part of BPI’s annual CEO meeting in Washington, which has seen top banking officials also meet with other government officials. A BPI spokesperson declined to comment on the meeting.

While the meeting with Yellen was scheduled months in advance, according to a source familiar with the matter, it came amid a tumultuous time for banks and financial markets.

The banking sector is endeavoring to shake off several weeks of turmoil spurred by the sudden failure of Silicon Valley Bank, which led to regulators seizing two more failing institutions and backing uninsured depositors in an effort to tamp down fears of broader contagion.

The meeting also comes as government officials are looking for an agreement to raise the nation’s borrowing cap. Yellen and other officials have warned that a failure to do so could unleash chaos on financial markets, as the U.S. government would not be able to meet its obligations as early as June 1.

“She outlined how a failure to raise or suspend the debt limit would be catastrophic for the financial system, as well as American families and businesses, and underscored the Administration’s belief that the debt limit should be addressed without delay,” the Treasury said in its statement.

President Joe Biden and top U.S. congressional Republican Kevin McCarthy have been negotiating over a potential deal to raise the borrowing cap.