The Biden administration is trying to allay fears and put a positive spin on the collapse of Silicon Valley Bank. In a Monday morning press briefing, President Biden said: “Thanks to the quick action of my administration over the last few days, Americans can have confidence that the banking system is safe.”
In response to rising fears, Biden administration officials announced that beginning Monday, March 13, “depositors will be able to access all of their funds” and “taxpayers will bear no losses.”
While Biden administration officials attempted to fault former President Donald Trump for the bank failure, many point to poor regulation and the Fed’s repeated moves to increase interest rates.
Financial experts also fault bank “risk assessment managers” for not properly preparing for fluctuations in the economy. The Daily Mail reported that Silicon Valley Bank did not have a risk assessment manager in place for the last nine months and chided U.K. financial risk managers for “prioritizing pro-diversity initiatives more than [their] actual role.”
On Sunday, financial regulators announced an emergency measure designed to protect personal accounts at Silicon Valley Bank. The Epoch Times depicted the rare measure as “a critical move in averting a panic over the bank’s collapse.”
The U.S. Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) elaborated on the emergency measure in a joint statement:
“Today, we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system.”
Treasury Secretary Janet Yellen affirmed she had spoken with the president and bank regulators and supported a plan that “fully protects all depositors.”
Among other protections, the emergency plan increases FDIC’s coverage — a single depositor currently enjoys coverage for $250,000. The new plan provides protection for all deposits — insured and uninsured.
Excerpts from the emergency statement read:
“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.”
“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.”
Financial officials announced the New York-based Signature Bank was adopting a similar measure after being closed on Sunday by the state chartering authority.
Their statement read: “All depositors of this institution will be made whole.”
On Sunday, the Fed announced it would provide additional funding to ensure banks meet depositor needs. The Fed’s statement assured: “The Federal Reserve is prepared to address any liquidity pressures that may arise.”
The Central Bank also moved to allay fears by establishing a new Bank Term Funding Program (BTFP). The goal is to guarantee deposits at failed institutions.
The Central Bank announced the Treasury Department will “make available up to $25 billion from the Exchange Stabilization Fund as a backstop for the BTFP.”
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