Customers of Silicon Valley Bank now have complete access to their deposits, after the bank’s failure, thanks to a groundbreaking move by the Biden administration.
This move by federal officials comes amid concerns that the bank’s failure could spark a panic and potentially lead to financial instability. The move is expected to backstop billions of dollars in uninsured funds, giving thousands of SVB customers relief and peace of mind.
The U.S. Treasury, Federal Reserve, and Federal Deposit Insurance Corporation announced that the government would back Silicon Valley Bank deposits in excess of the $250,000 federally insured limit.
The Treasury Department, Federal Deposit Insurance Corp., and the Federal Reserve stated that the FDIC’s insurance funds will be used to prevent depositors from losing money, citing “systemic risk” under which the agencies can take extraordinary actions. The action prevents those who had more than the $250,000 per-saver deposit insurance cap at SVB from facing potential losses.
“Depositors will have access to all of their money starting Monday, March 13,” the agencies said in a joint statement. “No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.”
According to the statement, SVB’s senior management will be replaced. While also announcing a new “Bank Term Funding Program,” which uses emergency authority to provide other banks with quick cash in exchange for collateral.
Meanwhile, President Biden has said he’s “firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again.”
The sources for this piece include an article in Axios.