FDIC Will Protect Silicon Valley Bank Depositors But Federal Reserve Rules Out Bailing Out Bank
FDIC has stepped up to protect deposit holders of Silicon Valley Bank Authorities said on Sunday that it would protect depositors. Depositors will have access to all of their money on Monday. However, the Federal Reserve has ruled out giving the bank a bail out.
Federal regulators stepped in and closed SVB after its collapse on Friday. Two days later, they closed New York’s Signature Bank. Regulators cited systemic risk. In the same statement, the government said that Signature’s depositors would similarly be made whole.
In both cases, the Treasury appeared primed to extend the backstop to cover deposits beyond the FDIC ceiling of $250,000.
The FDIC did state certain unsecured debt holders would not be protected. Regulators said they removed senior management of both banks.
The Federal Reserve said that it was making additional funding available to the nation’s banks. The move is to shield them from the economic fallout from the weekend’s events.
On Sunday evening, President Joe Biden issued a statement praising the response, saying he was “pleased” with the solution.
Earlier on Sunday, Treasury Secretary Janet Yellen had said that there were no plans to bail out the Silicon Valley Bank in the wake of the institution’s devastating crash.
“We’re not going to do that again,” she said in an interview with CBS’ Face the Nation. Yellen was referring to federal bailouts that took place after the 2008 market crash.
Yellen’s comments were made hours before a report that federal regulators put the bank up for auction on Saturday night. A result is expected to be made public before markets open on Monday,
Sen. Mark Warner (D-VA) was also chilly toward the idea of a federal bailout.
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