By KEN SWEET, CHRISTOPHER RUGABER, CHRIS MEGERIAN and CATHY BUSSEWITZ (Associated Press)

NEW YORK (AP) — Depositors withdrew savings and investors broadly sold off bank shares Monday as the federal government raced to reassure Americans that the banking system was secure after two bank failures fed fears that more financial institutions could fall.

President Joe Biden insisted that the system was safe after the second- and third-largest bank failures in the nation’s history happened in the span of 48 hours. In response to the crisis, regulators guaranteed all deposits at the two banks and created a program that effectively thew a lifeline to other banks to shield them from a run on deposits.

“Your deposits will be there when you need them,” Biden told the public, seeking to project calm. He also said the banking executives responsible for the failures would be held accountable.

Regulators closed the Silicon Valley Bank on Friday after depositors rushed to withdraw their funds all at once. The only larger failure in U.S. banking history was the 2008 collapse of Washington Mutual. New York-based Signature Bank also collapsed in the third-largest failure in the U.S.

In both cases, the government agreed to cover deposits, even those that exceeded the federally insured limit of $250,000.

Despite the message from the White House, investors broadly dumped shares in bank stocks. Shares of First Republic Bank plunged more than 70% even after the bank said it was taking emergency funding from the Federal Reserve and additional money from JPMorgan Chase.

First Republic wasn’t alone. Shares of well-known franchises like Charles Schwab, Fifth Third Bank, Truist, Comercia and Ally Financial all fell sharply.

The selloff happened in part because the country woke up to a new banking system and investors had to find the winners and losers, banking experts said.

There was no guarantee that the anxiety would …read more

Source:: The Denver Post