- US regulators issued a joint statement regarding the dissolution of the Silicon Valley bank.
- The regulators assured that the taxpayer would not suffer any losses due to the failure of the bank.
- Shareholders and some unsecured debt holders are not covered by the protection.
The Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) have issued a joint statement reassuring customers of the safety of their funds in the wake of the collapse of Silicon Valley Bank (SIVB). The group stressed that it would ensure that the taxpayer would not incur losses due to the failure of the bank.
federalreserveUSTreasuryFDICgov Release Statement on Actions to Protect the US Economy by Strengthening Public Confidence in Our Banking System, and Ensuring Depositors’ Savings Stay Safe: https://t.co/YISeTdFPrO
– The Federal Reserve (@federalreserve) March 12, 2023
According to the press release, financial regulators are taking decisive action to protect the US economy and enhance public confidence in the banking system.
The statement reads: “Today we are taking decisive action to protect the US economy by strengthening public confidence in our banking system. 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 way that promotes strong and sustainable economic growth.”
The group announced protections for all depositors in the SIVB based on recommendations from the FDIC and the Federal Reserve and in consultation with the President. As a result, depositors will have access to all their funds from today, March 13, 2023.
The group took the same opportunity to announce the implementation of a similar systemic risk exception for signature bank (NASDAQ :), New York. One bank also reported that it had been closed down by the state licensing authority. Like depositors with the SIVB, customers of the signature bank will be protected and the taxpayer will not suffer any losses.
Shareholders and some unsecured debt holders are not covered by the protection provided by the financial authorities. According to the announcement, the top management of the bank has been removed, and any losses will be recovered to the Deposit Insurance Fund to support uninsured depositors through a special assessment of the banks, as required by law. The Fed also promised to provide additional funding to eligible depository institutions. This will give banks the ability to meet the needs of depositors.
In conclusion, the group reassured the public of its steadfastness to maintain the stability of banks. He pointed out that the reforms carried out in the past after the financial crisis ensured better guarantees for the banking sector. He claimed that the combination of these reforms with today’s measures shows the commitment of regulators to ensuring that depositors’ savings remain safe.
The message after US regulators reassuring SIVB depositors about the safety of funds first appeared on the coins’ issuance.