Following bank collapses, the Biden White House is closely monitoring the Federal Reserve
Just 10 days after the Biden administration intervened with extraordinary emergency measures to mitigate the consequences from two bank collapses, all eyes are focused on the Federal Reserve as it gets ready to announce another prospective interest rate hike Wednesday afternoon.
Biden Officials from the White House will closely follow the highly anticipated rate decision and listen intently to every word Fed Chairman Jerome Powell has to say in order to look for any revealing cues about how the central bank is handling what has emerged as one of the most pressing economic crises of Joe Biden’s presidency.
For the administration’s top economic officials, who have spent the majority of the last two weeks in regular discussions and consultations with Powell and Fed officials, the situation produces a complex, if closely watched, dynamic.
The Fed’s primary responsibility extends beyond ensuring the stability of the financial system and US banks. In times of systemic risk, it can also offer backup cash for banks; this ability has brought the central bank back into the spotlight in the government’s bid to calm jittery markets.
Sources emphasise that Biden's directive has not altered in the past week.
Although they agreed it posed wider concerns connected to confidence, or the potential lack thereof, in the system, US officials saw no connection between the Credit Suisse collapse and the crisis that brought down American banks the previous weekend.
Following the turbulent days that followed the closures of Silicon Valley Bank and Signature Bank, White House officials have recently started to cautiously suggest that they see signs of the US banking sector stabilising. For his part, Biden has attributed the comprehensive actions his administration announced, including the introduction of an emergency lending programme by the Federal Reserve and the backstopping of all depositors’ funds held at the two institutions, with averting a more extensive financial crisis.
Treasury Secretary Janet Yellen stated during talks Tuesday in Washington, "I do believe we have a very strong and resilient banking system and all of us need to shore up the trust of depositors that that's the case."
It is yet unclear what exact initiatives the president would ultimately support, but he has also urged US lawmakers and authorities to tighten financial laws.
At the White House press briefing on Tuesday afternoon, press secretary Karine Jean-Pierre was asked how she and other officials were following the Fed’s impending announcement. She declined to comment.
“Yes, the Fed is independent. I don’t want to step in front of that; we want to allow them the room to make those financial judgements, Jean-Pierre remarked. I don’t even want to consider what Jerome Powell would say the next day.
