Yellen convenes Friday meeting with top US regulators as crisis engulfs banking sector

Treasury Secretary Janet Yellen connected Friday greeting chaired a backstage gathering pinch apical financial regulators amid renewed fears complete nan world banking system.

The gathering – held by nan Financial Stability Oversight Council – was closed to nan public, nan Treasury Department said successful a statement. The gathering was antecedently scheduled.

Established successful 2010 nether nan Dodd-Frank Act, nan FSOC is led by Treasury and includes nan heads of nan Federal Reserve, nan FDIC, nan Securities and Exchange Commission and different regulatory agencies. The assembly meets regularly to talk nan authorities of financial stableness and regulation. 

YELLEN SAYS US WILL TAKE MORE ACTION TO PROTECT SMALLER BANKS IF NEEDED

U.S. Treasury Secretary Janet Yellen takes her spot arsenic she arrives for a House Ways and Means Committee proceeding connected Capitol Hill March 10, 2023, successful Washington, D.C. (Drew Angerer/Getty Images / Getty Images)

Regulators person rushed to incorporate fallout aft nan stunning implosion of Silicon Valley Bank and Signature Bank earlier successful March, including protecting each deposits astatine nan 2 institutions – moreover those holding costs that exceeded nan FDIC's $250,000 security limit. The Fed besides launched a caller emergency backstop for lenders to thief them meet deposit withdrawals nether favorable terms.

The moves were intended to staunch a travel of costs from mini and location U.S. lenders arsenic customers rushed to banks deemed excessively large to fail. 

However, banks are still emotion nan sting from nan industry-wide turmoil. 

FUND MANAGERS WORRY SYSTEMIC CREDIT CRUNCH COULD CRASH US MARKETS

The logo of Swiss slope Credit Suisse is seen astatine its office successful Zurich, Switzerland March 24, 2021.  (Reuters/Arnd Wiegmann / Reuters Photos)

A caller banking sell-off gripped markets connected Friday greeting arsenic shares of Deutsche Bank tumbled, reigniting worries astir a broader financial crisis. 

Shares of nan German lender plunged astir 10% successful trading connected nan German banal exchange.

The driblet follows a steep emergence successful nan costs of financial derivatives, known arsenic in installments default swaps, that insure bondholders against nan slope defaulting connected its debts.

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Rising costs connected insuring indebtedness were besides a prelude to a government-backed takeover of Swiss lender Credit Suisse by its rival UBS.

The Associated Press contributed to this report.