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Collapsed Bank Deposits Fully Guaranteed

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Silicon Valley Bank | Image by Sundry Photography/Shutterstock

The U.S. government announced on Sunday that it is stepping in to save depositors at two failed banks.

All deposit accounts at Silicon Valley Bank and Signature Bank in New York have been guaranteed by the U.S. government, according to a joint statement from the Federal Reserve, Department of the Treasury, and Federal Deposit Insurance Corporation (FDIC).

“Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system. This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth,” the statement read.

Depositors at Silicon Valley Bank gained access to all of their funds on Monday, March 13.

“We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority,” continued the statement. “All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.”

Silicon Valley Bank was closed by California regulators on Friday following concerns surrounding the bank’s balance sheet. The bank was the 16th largest in the U.S. before it collapsed, according to CBS News, and is the largest to fail since Washington Mutual in 2008.

The FDIC has created the Deposit Insurance National Bank of Santa Clara, where all insured deposits from Silicon Valley Bank were transferred, per CBS.

During an appearance on Face the Nation Sunday, Treasury Secretary Janet Yellen asserted this was not a federal bailout but a move to protect the bank’s deposits.

“During the financial crisis [of 2008], there were investors and owners of systemic large banks that were bailed out,” Yellen said.

“And the reforms that have been put in place means that we’re not going to do that again but we are concerned about depositors and are focused on trying to meet their needs,” she said.

President Biden also clarified that taxpayers would not foot the bill for making customers of these failed banks whole.

“No losses will be borne by the taxpayers,” Biden claimed, according to Fox News.

“Instead, the money will come from the fees that banks pay into the deposit insurance fund. Because of the actions that our regulators have already taken, every American should feel confident that their deposits will be there if and when they need them.”

The Federal Reserve also announced in the release it would make funding available “to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors.”

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gypsy
gypsy
14 days ago

sure