Key Biden aide: Recent bank failures ‘isolated problems’

National Economic Council Director Lael Brainard said on Sunday that the recent high-profile failures of three mid-sized banks were “isolated problems” and stressed that the banking system is “sound.” 

“The environment has changed a lot over the last few years with interest rates going up by a large amount, and banks — several banks that have now failed and been taken over by healthier banks didn’t manage their risks,” Brainard said on CBS’s “Face the Nation.” 

“Those were isolated problems. But, of course, we’re all monitoring the situation very carefully. But we have the tools. We’ve taken strong actions. I think people know what the playbook is,” she added. Brainard was previously a top official at the Federal Reserve before President Biden named her in February to replace Brian Deese as the key White House economic adviser.

“So, no more failures?” asked CBS’s Margaret Brennan. 

“Well, in that sense, the system overall is sound. I can’t speak to particular institutions, obviously. That sits with the bank regulators. But, overall, you’ve seen that the banking system is sound and – and deserves continued vigilance,” Brainard said. 

Silicon Valley Bank, Signature Bank, and First Republic Bank have all collapsed this year, meaning three of the four largest bank failures in U.S. history have taken place over the last two months and shaking confidence in the banking system.

Brainard on Sunday stressed that the U.S. system has nearly 5,000 banks, ranging from banks in small communities to larger institutions, “the money center banks,” and said the midsize-bank failures “were dealt with in a way where depositors never had any question but that they would have access to their deposits.” 

“So, in that sense, Americans have confidence. The banking regulators took strong actions. We have the tools and they can be used again,” Brainard said. “More broadly, though, the banking system is sound, although we are monitoring very carefully.”