The US Treasury, Federal Reserve Board, and the Financial Deposit Insurance Corporation on Sunday (local time) announced that depositors of the failed Silicon Valley Bank will have access to all of their money starting from today, March 13.
In a joint statement released by Secretary of the Treasury Janet Yellen, Federal Reserve Board Chair Jerome H Powell, and FDIC Chairman Martin J Gruenberg announced they would “fully protect” all depositors who had funds in Silicon Valley Bank, just days after regulators took control of the institution.
“Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer,” read the statement.
After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors.
In addition, Signature Bank, a New York bank, was also closed by regulators over the weekend. Signature depositors will also be made whole.
“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. 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,” added the statement.
Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.
Finally, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors.
“The US banking system remains resilient and on a solid foundation, in large part due to reforms that were made after the financial crisis that ensured better safeguards for the banking industry. Those reforms combined with today’s actions demonstrate our commitment to take the necessary steps to ensure that depositors’ savings remain safe,” added the statement.
Meanwhile, US President Joe Biden lauded Yellen and National Economic Council Director for working “diligently with the banking regulators to address problems at Silicon Valley Bank and Signature Bank.”
“I am pleased that they reached a prompt solution that protects American workers and small businesses, and keeps our financial system safe. The solution also ensures that taxpayer dollars are not put at risk,” said Biden on actions to strengthen confidence in the banking system.
“The American people and American businesses can have confidence that their bank deposits will be there when they need them. I am firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again,” added Biden.
California regulators shut down Silicon Valley Bank on Friday after depositors rushed to withdraw money last week amid concerns about its balance sheet. The Federal Deposit Insurance Corporation (FDIC) was appointed receiver, and regulators are working to find a buyer for the institution, which ranked as the 16th-largest bank in the US before its failure.
The collapse of the 40-year-old bank, which catered to the tech industry, is the largest financial institution since the failure of Washington Mutual in 2008.
The collapse, the second largest bank failure in US history, roiled Wall Street for Monday morning’s opening of the stock market. (ANI)