Money matters
Nearly $100 billion in deposits pulled from banks; officials call system ‘sound and resilient’
Regulators have once again reached out to the public to assure them that the banking system is safe, as newly released data shows that close to $100 billion in deposits have recently been withdrawn from banks.
Treasury Secretary Janet Yellen, Federal Reserve Chairman Jerome Powell and more than a dozen other officials held a behind closed doors meeting of the Financial Stability Oversight Council on Friday.
The transcripts from the meeting suggested that a New York Fed staff member updated them on “market developments.”
“The Council discussed current conditions in the banking sector and noted that while some institutions have come under stress, the U.S. banking system remains sound and resilient,” the statement said. “The Council also discussed ongoing efforts at member agencies to monitor financial developments.”
No other information has been released from the meeting at this stage.
Data shows that the vast majority of withdrawals were from small banks. Large institutions saw deposits increase by $67 billion, while smaller banks experienced outflows of $120 billion.
The withdrawals reduced total deposits to a little over $17.5 trillion and represented about 0.6% of the total. Deposits have been consistently declining for the past year, decreasing by $582.4 billion since February of last year, as per Fed data, which was released on Friday.
Money market mutual funds have seen their assets increase over the last two weeks. Their assets have increased to $3.27 trillion, which is an increase of $203 billion, as per Investment Company Institute data.
Powell previously insured investors about the stability of the banking system earlier in the week.
“You’ve seen that we have the tools to protect depositors when there’s a threat of serious harm to the economy or to the financial system, and we’re prepared to use those tools,” Powell said Wednesday during a news conference that followed the Fed’s decision to hike benchmark interest rates another quarter percentage point. “And I think depositors should assume that their deposits are safe.”
Powell noted that deposit flows “have stabilized over the past week” following what he called “powerful actions” from the Fed to offer a buffer to investors.
Terry A. Hurlbut has been a student of politics, philosophy, and science for more than 35 years. He is a graduate of Yale College and has served as a physician-level laboratory administrator in a 250-bed community hospital. He also is a serious student of the Bible, is conversant in its two primary original languages, and has followed the creation-science movement closely since 1993.
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