Larry Summers Urges US Regulators to Pledge to Back Deposits If US Banks Fail
- Former Treasury chief calls for confidence-building messaging
- Summers also wants weekend statement of confidence in Europe
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Former Treasury Secretary Lawrence Summers urged current Secretary Janet Yellen and other top US regulators to pledge that they will back the uninsured deposits in any banks that fail in the next year — an important move that could help build confidence amid the current turmoil.
“There needs to be clarity on the situation regarding deposits,” Summers said on Bloomberg Television’s “Wall Street Week” with David Westin. While regulators don’t have legal authority to give a blanket guarantee, they do have “the essentially equivalent power to declare that, in the event of a bank’s failure, they will use the ‘systematic risk exemption’ in order to assure that depositors are paid off in full,” he said.