In an effort to promote healthy competition and cater to diverse financial needs, U.S. Treasury Secretary Janet Yellen has advocated for a diverse banking sector and warned against the concentration of power among big banks. Yellen emphasized the importance of maintaining a banking system that includes large, regional, and mid-sized community banks.
Speaking at the Wall Street Journal's CEO Council Summit in London, Yellen highlighted that banks of different types serve different needs, and this diversity is a strength of the banking system. She expressed her concerns about the increasing concentration among the largest banks, stating that it is not desirable.
Yellen's remarks come at a time when banking regulators are facing scrutiny following recent bank collapses that caused a global decline in banking shares and raised concerns about contagion. The collapse of Silicon Valley Bank and two other lenders has left a significant impact on the banking industry.
As a result of these bank failures, the Federal Deposit Insurance Corporation announced that the deposit insurance fund, which protects depositors in case of bank failures, was depleted by $16 billion. Large U.S. lenders are expected to bear the brunt of the cost to replenish the fund, although mid-sized banks will also contribute to the effort.
Yellen's advocacy for a diverse banking sector aims to maintain healthy competition throughout the economy and prevent the risks associated with excessive concentration of power among a few big banks. By supporting a variety of banks that cater to different needs, Yellen believes the financial system can better serve the interests of individuals and businesses alike.
