US regulators bail out Silicon Valley Bank customers
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- Federal regulators announced that depositors of Silicon Valley Bank will be paid in full
- In a statement released Sunday, the Treasury, Federal Reserve and FDIC said they would "fully protect" depositors with funds in the bank.
- SVB was shut down Friday afternoon after a stock price crash, leaving customers panicking.
In a Sunday announcement, the US Treasury, Federal Reserve Board, and the Financial Deposit Insurance Corporation announced they would "fully protect" all depositors who had funds in Silicon Valley Bank, just days after regulators took control of the institution.
"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," the Sunday evening statement said.
"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 announcement will come as a huge relief to SVB depositors who had been panicking about when and if they'd get access to their cash above the $250,000 amount that is normally guaranteed by the FDIC.
In addition, Signature Bank, a New York bank, was closed by regulators over the weekend. Signature depositors will also be made whole.
SVB was closed by regulators on Friday and put under the control of the Federal Deposit Insurance Corporation (FDIC). That followed a tumultuous few days, including a botched capital call and a rush of depositors withdrawing their funds.
On Sunday, Bloomberg reported that the FDIC started accepting bids on Saturday to find a buyer for SVB. The bids closed Sunday afternoon with the aim of finding a willing bid ahead of the market open in Asia, Bloomberg reported, citing sources.
Here's the full statement:
Washington, DC -- The following statement was released by Secretary of the Treasury Janet L. Yellen, Federal Reserve Board Chair Jerome H. Powell, and FDIC Chairman Martin J. Gruenberg:
Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system. This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth.
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. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.
We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. 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.
Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.
Finally, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors.
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. Those reforms combined with today's actions demonstrate our commitment to take the necessary steps to ensure that depositors' savings remain safe.