The government's initial strategy was simply to assert that public confidence in the banking system was strong, in hopes that confidence would thereby magically manifest.
slightly on Thursday, for a subcommittee of the House Appropriations Committee, but the message didn't really change.)by Powell after the Fed's rate-hike announcement, in which he said that "all depositors' savings and the banking system are safe."When the Economist's Simon Rabinovitch asked Powell whether we are now in a situation where "de facto deposit insurance covers all savings," Powell could have just said yes.
Yellen also undercut her message by telling one senator that "I have not considered or discussed anything having to do with blanket insurance or guarantees of all deposits.”All of the messages were buried within longer communications that covered a lot of ground; none of them were simple and succinct standalone statements.
A simple, clear, unhedged and unambiguous statement from the president, echoed repeatedly by Yellen and Powell, would go a very long way.
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