Silicon Valley Bank depositors can access money from today
What's the story
The collapse of Silicon Valley Bank has rocked the US banking system.
Now, to prevent its depositors from panicking, the Federal Deposit Insurance Corporation (FDIC), US Treasury, and Federal Reserve have released a joint statement.
The agencies have said that depositors will be able to access their funds starting today and the losses associated with SVB's resolution will not be borne by taxpayers.
Reason
Why was the decision taken?
The governmental bodies claimed that the decision about the Santa Clara, California-based SVB was taken to safeguard the US economy by "strengthening public confidence in the banking system."
They believe that this step would aid the banking system in providing credit to households/businesses, and also protect deposits so that "strong and sustainable economic growth could be seen."
Steps
What other steps are being taken by the government?
The FDIC, Federal Reserve, and US Treasury announced that certain unsecured debtholders and shareholders will not be protected.
A special assessment of SVB will be conducted to recover losses incurred to support the uninsured depositors. Meanwhile, the bank's senior management has been removed.
Finally, the Federal Reserve will provide extra funding to "eligible depository institutions" so that the needs of depositors are met.
Official words
'Those behind SVB mess will be held accountable'
US President Joe Biden has promised that those responsible for SVB's collapse will be held accountable.
"I am committed to holding those responsible for this mess accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again," he said in a statement.
Biden urged Americans to remain confident in the banking system.
History
A brief history of SVB
The SVB was founded in 1983 and had roughly $209 billion in total assets by the end of 2022.
It was one of the top 20 commercial banks in the US, and the biggest lender to go under in the nation since Washington Mutual back in 2008.
The SVB did business with roughly half of VC-backed start-ups in the US.
Information
Feds are giving a similar treatment to Signature Bank
Signature Bank, a New York state-chartered commercial bank has collapsed too and the feds are treating it the same way as the SVB. All depositors will get back their money and the losses pertaining to the bank's resolution will not be borne by taxpayers.