US Regulators Bail Out SVB Customers, Who Can Access All Their Money Monday
Treasury Secretary Janet Yellen on Sunday instructed the Federal Deposit Insurance Corporation to guarantee Silicon Valley Bank customers will have access to all of their money starting Monday.
By guaranteeing all deposits — even the uninsured money customers kept with the failed SVB bank — the government can ensure public confidence in America’s banking system, said Yellen, Federal Reserve Chair Jerome Powell and FDIC Chairman Martin J. Gruenberg in a joint statement….
The FDIC opened an auction Sunday for bids to acquire the bank, the Treasury Department said in a briefing with lawmakers in the California delegation, two sources familiar with the briefing told CNN…. Under Secretary for Domestic Finance Nellie Liang and Assistant Secretary for Legislative Affairs Jonathan Davidson led the briefing, during which they told members that the FDIC is prepared “to operate the institution” to ensure depositors can maintain payroll for their employees and that more operations will emerge in coming days, one of the sources said.
The treasury secretary’s statement clarified that “No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.”
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. 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.
Meanwhile, congresswoman Nancy Pelosi said there are multiple potential buyers for SVB, and “What we would hope to see by tomorrow morning is for some other bank to buy the bank.” The UK arm of the bank has already received a bid from the Bank of London.
From the treasury secretary’s statement:
The U.S. 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.
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