The depositors of the now shut Silicon Valley Bank will have access to all of their money from Monday, a joint statement by US treasury secretary Janet Yellen, Federal Reserve Board chairperson Jerome Powell and Federal Deposit Insurance Corporation chairperson Martin J Gruenberg read.
The joint statement said the decision is being taken to protect the US economy by strengthening public confidence in the American banking system. Stating that the 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.
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“Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer”, the joint statement read.
The finance secretary, Federal Reserve chief and FDIC chairperson also announced a similar ‘risk exception’ for Signature Bank, which was closed on Sunday by New York regulators.
“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”, the joint statement read.
The Signature Bank has been put into receivership just days after the collapse of SVB and the Silvergate Capital Corp. The lender had faced a torrent of deposit outflows last week, but the situation had stabilised yesterday, Bloomberg reported.
However, the Biden administration said that shareholders and certain unsecured debtholders of Signature Bank won’t be protected. The lender’s senior management has been removed, adding that any losses to the deposit insurance fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.
“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”, the joint statement read.
On Sunday, US treasury secretary Janet Yellen had ruled out a federal bailout for the Silicon Valley Bank, which was shut down by California regulator on Friday and handed to Federal Deposit Insurance Corporation (FDIC) as its receiver. It is the biggest bank failure since the collapse of Washington Mutual more than a decade ago.