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

Treasury Secretary Janet Yellen on Friday morning chaired a private meeting with top financial regulators amid renewed fears over the global banking system.

The meeting – held by the Financial Stability Oversight Council – was closed to the public, the Treasury Department said in a statement. The meeting was previously scheduled.

Established in 2010 under the Dodd-Frank Act, the FSOC is led by Treasury and includes the heads of the Federal Reserve, the FDIC, the Securities and Exchange Commission and other regulatory agencies. The council meets regularly to discuss the state of financial stability and regulation. 

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

Regulators have rushed to contain fallout after the stunning implosion of Silicon Valley Bank and Signature Bank earlier in March, including protecting all deposits at the two institutions – even those holding funds that exceeded the FDIC’s $250,000 insurance limit. The Fed also launched a new emergency backstop for lenders to help them meet deposit withdrawals under favorable terms.

The moves were intended to staunch a flow of funds from small and regional U.S. lenders as customers rushed to banks deemed too big to fail. 

However, banks are still feeling the sting from the industry-wide turmoil. 

FUND MANAGERS WORRY SYSTEMIC CREDIT CRUNCH COULD CRASH US MARKETS

A fresh banking sell-off gripped markets on Friday morning as shares of Deutsche Bank tumbled, reigniting worries about a broader financial crisis. 

Shares of the German lender plunged nearly 10% in trading on the German stock exchange.

The drop follows a steep rise in the cost of financial derivatives, known as credit default swaps, that insure bondholders against the bank defaulting on its debts.

Rising costs on insuring debt were also a prelude to a government-backed takeover of Swiss lender Credit Suisse by its rival UBS.

The Associated Press contributed to this report.