Janet Yellen: Leading the Response to the Regional Banking Crisis

　　Faced with an impending banking crisis, Treasury Secretary Janet Yellen worked tirelessly to stabilize the U.S. economy, drawing upon her extensive experience and seeking guidance from former Treasury Secretary Hank Paulson, who had navigated the 2008 financial crisis.

　　Navigating the Storm

　　As the crisis unfolded, Yellen assembled a team of experts from the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency, as well as congressional leaders and Wall Street executives. Guided by Paulson's advice, Yellen understood the urgency of swift government action to stem the bank run on Silicon Valley Bank.

　　On the afternoon of Friday, March 10, regulators took control of Silicon Valley Bank, sending shockwaves through the financial markets and triggering memories of the Great Recession. Yellen's extensive resume and proven leadership were put to the test as she worked to reassure various stakeholders, including financial markets, skeptical Republicans in Congress, and President Biden's economic team.

　　Collaboration and Action

　　Throughout the weekend, Yellen and her team worked tirelessly to find a buyer for Silicon Valley Bank and ensure that no taxpayer money would be used in the rescue. They also secured an emergency lending package to protect depositors at both Silicon Valley Bank and New York-based Signature Bank, which also failed on Sunday, March 12.

　　In an effort to prevent further regional bank collapses, Yellen proposed using bank funds to save First Republic, an idea that gained support from Jamie Dimon, CEO of J.P. Morgan Chase. Dimon rallied a coalition of banks to provide $30 billion in funding, averting a potential systemic crisis.

　　Addressing Criticism

　　Despite her efforts, Yellen faced criticism from Republicans, who accused the Biden administration of bailing out risky banks and attributed the crisis to the administration's spending policies, which they claimed led to high inflation and forced the Fed to raise interest rates, impacting banks and their investments.

　　In response, President Biden called on Congress to strengthen bank regulations and empower regulators to impose stricter penalties on executives of failed banks. He also emphasized the need for a "smart, experienced treasury secretary" like Yellen, who seeks diverse opinions and engages with market participants in real time.

　　Ongoing Challenges

　　While the immediate crisis was averted, Yellen's work is far from over. She convened a meeting of the Financial Stability Oversight Council to address concerns about Deutsche Bank, a German multinational investment bank facing stock market turmoil.

　　Yellen's leadership and expertise have been instrumental in stabilizing the financial system during this challenging period. However, she remains vigilant, recognizing that the test is not over and that ongoing efforts are necessary to safeguard the nation's financial health.