Federal regulators have stepped in to support all of Silicon Valley Bank’s deposits, resolving key uncertainty surrounding the second-biggest bank failure in US history hours before global stock markets resume trading.
The US Treasury, the Federal Reserve and the Federal Deposit Insurance Corporation said Sunday that the government would support Silicon Valley Bank’s deposits beyond the federally insured limit of $250,000. The decision addressed concerns about the fate of uninsured funds at the Santa Clara, California-based bank, the 16th-largest in the country, which had $209 billion in assets and more than $175 billion in deposits.
«Depositors will have access to all their money starting Monday, March 13,» the agencies said in a joint statement. «No loss associated with the Silicon Valley Bank resolution will be borne by the taxpayer.»
SVB’s senior management would be dismissed, the statement said.
The announcement marks an extraordinary step by federal regulators to calm financial markets ahead of Monday’s market open. dow futures jumped more than 150 points after the news of the backup plan.
Regulators also said they took control of a second bank, Signature Bank of New York, which is about half the size of SVB and has become a hub for cryptocurrency funding. They said a similar guarantee would be instituted for Signature Bank depositors in the closing process.
A senior Treasury official told reporters late Sunday that regulators are looking at other banks that may have similar problems. As part of coordinated interagency efforts to support any further bank failures, the Federal Reserve established an emergency lending program to give banks quick and expanded access to funds «in times of stress.»
A federal guarantee for SVB depositors was the hoped-for solution among tech industry players and pundits calling for a bailout of the bank’s corporate and start-up clients, many of whom had all but frozen their operations in anticipation of what would come next. would come next for a bench. who owned much of his property.
The intervention forced Washington officials to invoke a «systemic risk exception,» an extraordinary measure that allows regulators to intervene without action by Congress, which requires approval from the Federal Reserve, FDIC, and Treasury in consultation with President Biden.
SVB was closed Friday by the California Department of Financial Innovation and Protection to protect deposits. As part of that move, the FDIC said it had formed a separate entity where SVB deposits would be available Monday.
gretchen morgenson, Allie Raffa and denis romero contributed.