A branch of First Citizens Bank in Dunwoody, Georgia, on Thursday, March 23, 2023.
Elijah Nouvelage | Bloomberg | Getty Images
Regulators reassured the public that the banking system is safe as new data showed customers recently raised nearly $100 billion in deposits.
Treasury Secretary Janet Yellen, Federal Reserve Chairman Jerome Powell and more than a dozen other officials called a special closed-door meeting of the Financial Stability Oversight Council on Friday.
A readout of the session indicated that a New York Fed official briefed the group on “market developments.”
“The Board discussed current conditions in the banking sector and noted that while some institutions have come under strain, the US banking system remains sound and resilient,” the statement said. “The Council also discussed ongoing efforts by member agencies to monitor financial developments.”
No other details were provided about the meeting.
The readout, released shortly after the market close on Friday, came around the same time as new Fed data showed that bank customers collectively withdrew $98.4 billion from accounts for the week ending March 15.
That would have covered the period when the sudden failures of Silicon Valley Bank and Signature Bank rocked the industry.
Records show that most of the money came from small banks. Large institutions saw deposits increase by $67 billion, while smaller banks saw outflows of $120 billion.
The withdrawals brought total deposits down to just over $17.5 trillion and accounted for about 0.6% of the total. Deposits have fallen steadily over the past year, falling $582.4 billion since February 2022, according to data released Friday by the Fed.
Money market funds have seen assets rise from $203 billion to $3.27 trillion over the past two weeks, according to data from the Investment Company Institute through March 22.
Earlier this week, Powell also tried to reassure the public that the banking system is safe.
“You have seen that we have the tools to protect savers when there is a threat of serious harm to the economy or the financial system, and we are prepared to use those tools,” Powell said Wednesday at a news conference following the The Fed’s decision to raise benchmark rates another quarter of a percentage point. “And I think savers should assume their deposits are safe.”
Powell noted that deposit flows have “stabilized over the past week” after what he called “strong actions” by the Fed to shut down the system.
Banks are making massive use of emergency credit facilities that were set up after the bankruptcies of SVB and Signature. Data released Thursday showed that institutions have taken out an average of $116.1 billion in loans daily from the central bank’s discount window, the highest since the financial crisis, and have taken out $53.7 billion from the Bank Term Funding Program.
