The statement on Sunday evening stated that "Secretary (Janet) 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" after receiving a recommendation from the boards of the FDIC and the Federal Reserve and consulting with the President.
"Beginning on Monday, March 13, depositors will have access to all of their funds. The taxpayer won't incur any losses as a result of Silicon Valley Bank's bankruptcy."
Moreover, officials over the weekend also shut down the New York bank Signature Bank. Moreover, signature depositors will be fully reimbursed.
On Friday, SVB was shut down by authorities and given to the FDIC. That came after a turbulent few days that saw a flurry of depositors withdraw their money and a bungled capital call.
The FDIC stated when SVB's closure was announced that the first $250,000 of customer deposits would be available by Monday, but any sums in excess of that would be refunded over time. Additionally, as the FDIC only covers the first $250,000 of a customer's deposit, it was possible for clients to lose some of the money they had put with SVB.
This caused chaos for hundreds of companies who banked with SVB. Many business entrepreneurs were concerned that they wouldn't be able to pay their employees in the upcoming weeks, as Insider reported. US regulators have eliminated that risk by saying that depositors will be paid whole and that they will begin having access to their monies on Monday.
In response to the failure of Silicon Valley Bank on Friday and the closure of Signature Bank announced today, the Federal Reserve, FDIC, and Treasury have taken action to prevent broader contagion throughout the banking system, according to a statement from Greg McBride, chief financial analyst at Bankrate.
Here is the full statement:
Bloomberg revealed on Sunday that the FDIC began taking offers on Saturday in order to find a buyer for SVB. In order to secure a willing bid before the Asian market opened, the bids were closed on Sunday afternoon, according to Bloomberg, who cited sources.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.
"The future of Silicon Valley Bank's assets is still uncertain. It is now unknown whether there will be one buyer or several purchasers "said McBride.
