Nearly $100 billion in deposits pulled from banks; officials call system ‘sound and resilient’
A First Citizens Bank branch in Dunwoody, Georgia, on Thursday, March 23, 2023.
Elijah Nouvelage | Bloomberg | Getty Images
Regulators again assured the public that the banking system is safe, which came as fresh data showed customers recently pulled 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 Oversight Council on Friday.
A readout from the session indicated that a New York Fed staff member briefed the group 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.”
There were no other details provided on the meeting.
The readout, released shortly after the market close Friday afternoon, came around the same time as new Fed data showed that bank customers collectively pulled $98.4 billion from accounts for the week ended March 15.
That would have covered the period when the sudden failures of Silicon Valley Bank and Signature Bank rocked the industry.
The withdrawals brought total deposits down to just over $17.5 trillion and represented about 0.6% of the total. Deposits have been on a steady decline over the past year or so, falling $582.4 billion since February 2022, according to the Fed data released Friday.
Earlier this week, Powell also sought to assure the public that the banking system is safe.
“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 backstop the system.
Banks have been flocking to emergency lending facilities set up after the failures of SVB and Signature. Data released Thursday showed that institutions took a daily average of $116.1 billion of loans 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.