U.S. President Joe Biden spoke on Monday (March 13) about problems with the banking system after the administration took steps to stem a potential crisis following the collapse of two major banks.
“The American people and American businesses should have confidence that their bank deposits will be there when they need them,” Biden said in a statement late Sunday.
Depositors at Silicon Valley Bank of California and Signature Bank of New York will have access to all their funds on Monday, the Treasury Department said in a statement Sunday.
Regulators also said taxpayers would not bear the cost of settling SVB and Signature Bank.
The Treasury statement followed a meeting of officials from the top financial regulator. The statement noted that the Federal Reserve has also made available an emergency lending program to other banks to provide additional stability to the broader banking system.
The FDIC, which insures depositors and oversees financial institutions, said Monday it has transferred all of Silicon Valley Bank’s deposits to a so-called “bridging bank,” which will be run by a board appointed by the agency until all jobs stabilize.
The Bank of England also announced on Monday the sale of Silicon Valley Bank’s UK branch to HSBC in order to stabilize the bank’s operations, “ensure the continuity of banking services, minimize the impact on the UK technology sector, and support confidence in the financial system”…
A statement from the Bank of England noted that all depositors’ funds are safe and that SVB’s UK branch will continue to operate as normal.
These actions were triggered by the collapse of Silicon Valley Bank. U.S. regulators took control of the bank on Friday amid concerns over its financial condition that led to a simultaneous run on depositors.
With $200 billion in assets, Silicon Valley Bank is also the second-largest bank to fail in U.S. history. Silicon Valley Bank is heavily involved in lending to venture capital firms, with a particular focus on the tech industry.
Signature Bank also has a large number of clients in the technology industry, which also includes virtual currencies. With $100 billion in assets, the bank was also the third-largest bank to fail in U.S. history.
Both bank failures were linked to soaring interest rates that have weighed heavily on the market capitalizations of both banks, shrinking their holdings in bank bonds and mortgage-related securities.