by Federal regulators stepped in on Sunday to support all Silicon Valley Bank deposits, resolving key uncertainty surrounding the second-biggest bank failure in US history hours before global stock markets resume trading.
The US Treasury, the Federal Reserve and the Federal Deposit Insurance Corporation said the government would support Silicon Valley Bank’s deposits beyond the federally insured limit of $250,000. The decision addressed concerns about the fate of uninsured funds at the Santa Clara, California-based bank, the 16th-largest in the country, which had $209 billion in assets and more than $175 billion in deposits.
“Depositors will have access to all their money starting Monday, March 13,” the agencies said in a joint statement Sunday night. “No losses associated with the Silicon Valley Bank resolution will be borne by the taxpayer.”
SVB’s senior management will be removed, the statement said.
The announcement marks an extraordinary step by federal regulators to calm financial markets before trading resumes Monday in Asia and Europe, followed by North America. dow futures jumped more than 150 points Sunday night after the backup plan news.
President Joe Biden said Sunday night that he was pleased.
“The American people and American businesses can trust that their bank deposits will be there when they need them,” he said in a statement. “I am strongly committed to holding those responsible for this mess fully accountable and to continue our efforts to strengthen supervision and regulation of the largest banks so that we are not in this position again.”
He said he would talk more about bank security on Monday morning.
Some Silicon Valley Bank customers and employees breathed a sigh of relief after the regulators’ announcement.
Vanessa Pham said she was preparing for the possibility that Omsom, the Asian food business she co-founded, and the banks with SVB, would run out of money within two weeks to three months.
“I will be patiently and anxiously awaiting the actual deposit into our bank and our access to it,” Pham said.
A source inside Silicon Valley Bank who was working as a managing director at a regional office before closing Friday said he was happy for his clients. He welcomed what he called a “favorable resolution,” adding that he feared tens of thousands of jobs would have been lost if uninsured deposits were not covered.
A second SVB employee said on Sunday: “I think the feeling that customers were going to lose money and that they were dealing with all this disruption on our behalf just crushed people. So now at least they’re going to get their deposits back, which is a great sense of relief.”
The employee added that while depositors have been guaranteed, bank employees, whom SVB has told number more than 8,500 — face doubts about their jobs: “There is still a lot of uncertainty. Management was fired as part of that, and we could still be bought.”
Federal regulators also said Sunday that they have taken control of a second bank, Signature Bank of New York, which is about half the size of SVB and has become a hub for cryptocurrency funding. They said a similar guarantee would be instituted for Signature Bank depositors in the closing process.
A senior Treasury official told reporters on Sunday that regulators are looking at other banks that may have similar problems. As part of coordinated interagency efforts to support any further bank failures, the Federal Reserve has established an emergency lending program to give banks quick and expanded access to funds “in times of stress.”
The official also did not rule out the possibility of finding a buyer for SVB or Signature Bank.
A federal guarantee for SVB depositors was the hoped-for solution among tech industry players and pundits calling for a bailout of the bank’s startup and corporate clients, many of whom had all but frozen their operations in anticipation of what would come next. he would come next for a bank that owned a large part of his assets.
The intervention forced Washington officials to invoke a “systemic risk exception,” an extraordinary measure that allows financial regulators to intervene without action by Congress. The move required the joint approval of the Federal Reserve, FDIC, and Treasury in consultation with Biden.
UK bank officials were watching the situation with their own technological economy in mind.
“You know, there has been a lot of concern that Silicon Valley Bank in the UK, like in the US, is very important to a lot of tech companies, which obviously employ a lot of people in highly skilled jobs,” said the British Prime Minister Rishi Sunak. he told NBC News’ Lester Holt on Sunday night.
He said his government was determined to support the well-being of the UK tech sector and “hopefully we will announce those plans relatively soon. “
gretchen morgenson, Allie Raffa, denis romero and they shine contributed.
