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US Treasury head says failure of a small bank can trigger demise of other banks

US Treasury head says failure of a small bank can trigger demise of other banks
'SVB has experienced a calamitous run,' says Janet Yellen

By Ovunc Kutlu

ISTANBUL (AA) - The US Treasury chief on Wednesday said that the failure of a small bank can trigger the demise of other smaller banks.

"The failure of a small bank, like a community bank, can likewise trigger a run on other banks, and failure of that bank could lead to a systemic failure," Janet Yellen said before the Financial Services and General Government Subcommittee at the US Senate.

Yellen's comments came in the aftermath of the sudden demise of Silvergate Bank, Silicon Valley Bank (SVB), Signature Bank and First Republic Bank, which have all gone under within a matter of weeks.

"SVB has experienced a calamitous run, a run that was so enormous that it overwhelmed the liquidity of this bank, and it created the potential for the fear for the safety about uninsured depositors in many other banks," she said before the lawmakers. "It risked contagion throughout the banking system."

"Our top priority is to protect the health of the US economy," Yellen added.

source: News Feed
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