On Sunday, the New York Department of Financial Services, or DFS, announced that it had taken possession of Signature Bank. The DFS appointed the Federal Deposit Insurance Corporation, or FDIC, as the bank’s trustee. In a joint statement, the US Federal Reserve, the Treasury Department and the FDIC explained that all Signature depositors would be repaid, similar to a decision made by the federal government to bail out Silicon Valley Bank (SVB). ) Of California.
The government takes decisive action to protect depositors and increase public confidence in the US banking system.
Financial regulators have shut down the cryptocurrency-friendly bank, Signature Bank, and the FDIC is now in control of the New York-based financial institution. in a Press release Posted late Sunday, Superintendent Adrienne Harris of the New York Department of Financial Services, or DFS, announced the decision. Harris detailed that Signature had approximately $110.36 billion in assets and total deposits of approximately $88.59 billion as of December 31, 2022.
The news follows the collapse of Silvergate Bank and the failure of Silicon Valley Bank, or SVB, which was the second largest banking collapse in the US since the failure of Washington Mutual, or Wamu, in 2008. While many observers of the market had to wait all weekend to find out what would happen to SVB, the public doesn’t have to wait any longer as the US Federal Reserve, Treasury Department and FDIC all addressed the situation in Press release.
The update, posted at 6:15 pm ET, explains that the US government is taking “decisive action to protect the US economy.” and reinforce “public confidence in our banking system.” After consulting with Treasury Secretary Janet Yellen, the FDIC and the Federal Reserve have approved a plan that fully protects all depositors. The government says the funds will be available to all depositors on March 13 and the resolution “will not be borne by the taxpayer.” In addition to applying this plan to SVB, the resolution to complete all depositors will also apply to Signature Bank.
@federal Reserve announces the Bank Term Financing Program (BTFP) to support American businesses and households, ensuring banks have the ability to meet the needs of all their depositors: https://t.co/JIMjkooIDV
— Federal Reserve (@federalreserve) March 12, 2023
At the same time the joint statement came out, another update He explained that the Federal Reserve had created a Bank Term Financing Program, or BTFP, to help failing banks and their depositors. “With the approval of the Secretary of the Treasury, the Treasury Department will make available up to $25 billion from the Exchange Rate Stabilization Fund in support of the BTFP. The Federal Reserve does not anticipate that it will be necessary to draw on these backup funds,” the US central bank stated.
The US central bank added:
The Board is carefully monitoring developments in the financial markets. The capital and liquidity positions of the US banking system are strong and the US financial system is resilient.
What impact do you think the government’s actions to protect depositors in the Silicon Valley Bank and Signature Bank cases will have on the banking industry in general and public confidence in financial institutions? Share your thoughts on this topic in the comments section below.
image credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or a solicitation of an offer to buy or sell, or a recommendation or endorsement of any product, service or company. bitcoin.com does not provide investment, tax, legal or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
