An indication for Silicon Valley Bank (SVB) headquarters is seen in Santa Clara, California, U.S.
| Photo Credit: REUTERS
In a step geared toward defending the U.S. financial system by strengthening public confidence within the nation’s banking system, the Biden administration introduced that depositors of the Silicon Valley Bank will have access to their money from Monday.
After receiving suggestions from the boards of the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve, and consulting with the president, Treasury Secretary Janet Yellen on Sunday authorised actions enabling the FDIC to full its decision of the Silicon Valley Bank, Santa Clara, California, in a fashion that absolutely protects all depositors, an official assertion mentioned.
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“The depositors will have access to all their money starting Monday, that is, March 13. No losses associated with the resolution of the Silicon Valley Bank (SVB) will be borne by the taxpayer,” mentioned a joint assertion issued by the Department of the Treasury, Federal Reserve, and FDIC.
“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,” it mentioned.
No safety for shareholders
According to the interagency federal assertion, shareholders and sure unsecured debt holders, nevertheless, will not be protected.
“The 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,” it mentioned.
Finally, the Federal Reserve Board had on Sunday introduced it might make out there further funding to eligible depository establishments to assist guarantee banks have the power to meet the wants of all their depositors, it mentioned.
“This step will ensure that the US 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 assertion famous.
According to the assertion issued by Yellen, Federal Reserve Board chair Jerome Powell and FDIC chairman Martin Gruenberg, the United States’ banking system stays resilient and on a stable basis, largely due to reforms that have been made after the monetary disaster that ensured higher safeguards for the banking business.
“Those reforms combined with today’s action demonstrate our commitment to take the necessary steps to ensure that depositors’ savings remain safe,” it added.
California-based Silicon Valley Bank, the sixteenth largest financial institution within the United States, was closed on Friday by the California Department of Financial Protection and Innovation which later appointed the FDIC as its receiver.
