The federal government has stepped up efforts to contain the damage of the collapse of Silicon Valley Bank by assuring that all depositors to the bank will have access to all of their money as of March 13.
The Treasury Department, Federal Reservce and FDIC put out a joint statement on Sunday to assure markets that all SVB depositors will be protected from losses as the bank faces an exodus of customers. The statement also reinforced that the government’s safety net does not extended to SVB shareholders, senior managers or “certain unsecured debtholders.”
“No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer,” the statement ready. “After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors. Depositors will have access to all of their money starting Monday, March 13.”
The statement comes after Yellen faced tough questioning on today’s Sunday morning public affairs shows about the federal government’s response to the swift demise of SVB, which catered to the tech industry and venture capital-fueled start up venture. Roku is among the media and entertainment companies known to have significant holdings based at SVB.
“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 statement read. “Those reforms combined with today’s actions demonstrate our commitment to take the necessary steps to ensure that depositors’ savings remain safe.”
The federal financial regulators also highlighted New York-based Signature Bank, which was closed March 12 by Empire State regulators. “All depositors of this institution will be made whole,” the statement read.
The unraveling of Silicon Valley Bank bank began March 8 when the company acknowledged it was raising $500 million in cash and unloading $21 billion in assets. That sparked widespread alarm and spurred what CNBC described as a “Twitter-led bank run.”
The statement also confirmed that the Federal Reserve Board “will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors.”