The Treasury Department announced Sunday evening in a joint statement with the Federal Reserve and the FDIC that all of the Silicon Valley bank’s deposits will be made available on Monday – the same for the Signature Bank which was taken over by regulators on Sunday. of New York State.
The statement indicates that a special assessment will be imposed on FDIC member banks to cover any losses and that taxpayers will not bear the cost of losses. The FDIC will also make additional funds available to member banks (in the event of multiple runs).
The decision to support banks is underway to avoid runs on banks on Monday morning and to prevent systemic failure of companies with funds in banks.
Joint statement from the Treasury Department, Federal Reserve, and FDIC
WASHINGTON, DC – The following statement was released by Treasury Secretary Janet L. Yellen, Federal Reserve Board Chairman Jerome H. Powell and FDIC Chairman Martin J. Gruenberg:
Today, we are taking decisive action to protect the US economy by strengthening public confidence in our banking system. This step will ensure that the U.S. banking system continues to play its vital role of protecting deposits and providing access to credit to households and businesses in a way that supports strong and sustainable economic growth.
After receiving a recommendation from the FDIC and Federal Reserve Boards, and consulting with the President, Secretary Yellen approved actions allowing the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, Calif. , in a way that fully protects all depositors . Depositors will have access to all of their money from Monday, March 13. No loss 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 Silicon Valley Bank resolution, no loss will be borne by the taxpayer.
Shareholders and certain unsecured creditors will not be protected. Senior management was also removed. Any loss incurred by the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment from the banks, as required by law.
Finally, the Federal Reserve Board announced on Sunday that it will make additional funds available to eligible depository institutions to ensure banks have the ability to meet the needs of all of their depositors.
The US banking system remains resilient and rests on solid foundations, thanks in large part to the reforms undertaken after the financial crisis which provided better protections for the banking sector. These reforms combined with today’s actions demonstrate our commitment to taking the necessary measures to ensure the security of depositors’ savings.
