After the bankruptcy of the US start-up financier Silicon Valley Bank (SVB), the US government announced that all deposits with the bank would be protected. Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell and the US deposit insurance company FDIC said in a joint statement on Sunday evening (local time) that all depositors would be fully protected.
They could access all of their money starting Monday. “The taxpayer will not suffer any losses related to the resolution of Silicon Valley Bank,” it said.
A similar exemption also applies to Signature Bank in New York, which was closed by its state licensing authority on Sunday. All depositors of this institution would also be compensated. These are important measures to protect the US economy by increasing public confidence in the US banking system. The US banking system is still resilient and stands on solid ground.
A senior Treasury official stressed that the aim was to help depositors, not to bail out the banks. It is not a situation like the 2008 financial crisis.
The bank’s closure last Friday is the second largest bank failure in US history and the largest since the height of the financial crisis 14 years ago.