U.S. Treasury Secretary Janet Yellen recently addressed her speaking arrangement at the Independent Community Bankers of America (ICBA) 2023 Capital Summit in a tweet.
"Today, I spoke at the Independent Community Bankers of America 2023 Capital Summit about the essential role of community banks in the economy and the urgent need for Congress to address the debt limit," Yellen wrote.
At the summit, Yellen stressed the importance of community banks in the U.S. financial system, praising the role of community banks in offering stability and financial services to their local communities.
"In 2020, community banks – like all banks –reported pressures from the [COVID-19] pandemic," Yellen said. "Those pressures have largely been addressed over the past two years. Earnings have improved: Community banks reported higher net income in 2022 than before the pandemic began. Loan growth has been strong and broad-based. And according to the latest reports from regulators, capital ratios remain robust. Asset quality is favorable. And community banks have ample liquidity to serve their customers. Their performance is a testament to the good management of many community banks across the country."
Yellen also addressed recent developments in the regional banking system, acknowledging the concerns raised by the failures of two large regional banks in early 2023. However, she also reassured attendees that the situation has stabilized and that the U.S. banking system remains sound with strong liquidity and capital.
"I believe that the decisive actions that we took in March to protect depositors and provide additional liquidity to the system mitigated the very serious risk of broader financial contagion in the banking system," Yellen said. "Let me be clear: We did not take these steps to aid specific institutions or classes of institutions. These actions were necessary to prevent the difficulties facing two specific banks from spilling over to other banks – including banks on Main Streets across the country."
Yellen also emphasized the urgent need for Congress to address the impending debt limit deadline, warning that a U.S. default would have catastrophic economic and financial consequences, reversing the hard-earned progress of the post-pandemic economic recovery and causing suffering nationwide. She added that suspending the debt limit does not authorize new federal spending, but ensures that the government can meet its preexisting commitments.
"Too many businesses – including yours – are having to spend your time planning around the potential risk of U.S. default, instead of thinking about longer-term investments that will grow your enterprises and boost the economy," Yellen said. "And too many households are having to worry about how they will get by without the payments that the government has promised them – and that these American families have earned. The U.S. economy hangs in the balance. The livelihoods of millions of Americans do too. There is no time to waste. Congress should address the debt limit as soon as possible."