A branch of First Citizens Bank in Dunwoody, Georgia on Thursday, March 23, 2023.
Elijah Nouvelage | Bloomberg | Getty Images
Regulators reassured the public the banking system is safe as new data showed customers recently withdrew nearly $100 billion in deposits.
Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell and more than a dozen other officials called a closed special meeting of the Financial Stability Oversight Council on Friday.
A transcript of the meeting suggested a New York Fed official briefed the group on “market developments.”
“The Council discussed current banking sector conditions and noted that the US banking system remains sound and resilient, although some institutions have come under pressure,” the statement said. “The Council also discussed ongoing efforts by member agencies to monitor financial developments.”
No further details about the meeting were given.
The ad, which was released shortly after Friday’s market close, came around the time new Fed data showed that bank customers withdrew a total of $98.4 billion from accounts in the week ended March 15.
That would have covered the period when the sudden collapses of Silicon Valley Bank and Signature Bank rocked the industry.
Data shows that most of the money came from small banks. Deposits at large institutions increased by USD 67 billion, while smaller banks recorded outflows of USD 120 billion.
The withdrawals brought total deposits down to just over $17.5 trillion and accounted for about 0.6% of the total. Deposits have been falling steadily over the past year or so, falling $582.4 billion since February 2022, according to Fed data released on Friday.
Money market mutual funds have seen assets in the past two weeks rise by $203 billion to $3.27 trillion through March 22, according to data from the Investment Company Institute.
Earlier this week, Powell also attempted to reassure the public that the banking system is safe.
“You have seen that we have the tools in place to protect depositors if there is a threat of serious damage to the economy or the financial system, and we stand ready to deploy those tools,” Powell said Wednesday during a news conference following the Fed’s decision to raise key interest rates by another quarter of a percentage point. “And I think depositors should assume that their deposits are safe.”
Powell noted that deposit flows “have stabilized over the past week” after the Fed took “powerful action” to halt the system.
Banks are flocking to emergency lending facilities set up after the failure of SVB and Signature. Data released Thursday showed institutions borrowed an average of $116.1 billion daily from the central bank’s discount window, the highest since the financial crisis, and withdrew $53.7 billion from the bank term funding program.