Treasury Secretary Janet Yellen Testifies Before American Bankers Association, Reassuring Depositors of Government Action in Event of Bank Run.

Treasury Secretary Janet Yellen testified before the American Bankers Association on Tuesday, discussing the government’s response to the recent collapse of Silicon Valley Bank (SVB) and Signature Bank. Yellen said the federal government has a plan in place to protect uninsured bank depositors in the event of a similar bank run.

Yellen highlighted the Federal Reserve’s new lending facility and its existing discount window as effective tools for providing liquidity to the banking system. She also praised the government’s “decisive and forceful actions” for calming the banking crisis and restoring confidence in the system.

Yellen discussed the government’s emergency rescue of SVB and Signature Bank’s depositors and said similar action could be taken if smaller institutions experience a bank run. She noted that the US banking system remains sound, but warned that similar action could be warranted if deposit outflows from regional banks pose the risk of contagion.

The Treasury Secretary’s remarks come as bank stocks have seen a slight rebound following the collapse of SVB and Signature Bank. Yellen’s testimony is seen as a sign of confidence in the banking system and a reassurance that the government is prepared to take action if needed.