A branch of First Citizens Bank in Dunwoody, Georgia on Thursday, March 23, 2023.
Elie Nouvelage | Bloomberg | Getty Images
Regulators reassured the public that the banking system is safe as new data showed customers had recently withdrawn nearly $100 billion in deposits.
Treasury Secretary Janet Yellen, Federal Reserve Chairman Jerome Powell and more than a dozen other officials convened a special closed meeting of the Financial Stability Supervisory Board on Friday.
A readout of the session said a New York Fed staffer briefed the group on “market developments.”
“The Board discussed current conditions in the banking industry and noted that while some institutions are struggling, the U.S. banking system remains strong and resilient,” the statement said. “The Board also discussed member agencies’ ongoing efforts to monitor financial developments.”
No other details were provided about the meeting.
The reading, released shortly after the market closed on Friday, came around the same time as new data from the fed showed that bank customers collectively withdrew $98.4 billion from accounts for the week ended March 15.
This would have covered the period when the sudden Silicon Valley Bank and Signature Bank bankruptcies shook up the industry.
The data shows that most of the money came from smaller banks. Large institutions saw deposits rise by $67 billion, while smaller banks saw outflows of $120 billion.
Withdrawals brought total deposits down to just over $17.5 trillion and accounted for about 0.6% of the total. Deposits have declined steadily over the past year or so, falling $582.4 billion since February 2022, according to Fed data released Friday.
Money market mutual funds have seen their assets increase over the past two weeks, up $203 billion to $3.27 trillion, according to data from the Investment Company Institute through March 22.
Earlier this week, Powell also sought to assure the public that the banking system is safe.
“You have seen that we have the tools to protect depositors when there is a threat of serious harm to the economy or the financial system, and we are ready to use those tools,” Powell said Wednesday at a press conference. that followed the Fed’s decision to raise benchmark interest rates another quarter of a percentage point. “And I think depositors should assume their deposits are safe.”
Powell noted that deposit flows “have stabilized over the past week” following what he called “powerful actions” by the Fed to support the system.
Banks flocked to the emergency lending facilities set up after the failures of SVB and Signature. Data released Thursday showed institutions took out a daily average of $116.1 billion in loans from the central bank’s discount window, the highest since the financial crisis, and withdrew $53.7 billion in dollars from the banks’ term funding program.