A joint statement assured that all customer deposits in the respective banks will be honored by the federal government.
The US Treasury, the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) announced on Sunday that they would take “decisive action” to strengthen public confidence in the US banking system. This decision came after after the FDIC and Federal Reserve recommended that Silicon Valley Bank and Signature Bank be placed under systemic risk exceptions. The measure would allow the FDIC to wind up Santa Clara, California-based Silicon Valley Bank in a way that “fully protects” depositors’ money and ensures their access to credit. The same would apply to New York, New York-based Signature Bank, which was closed today by its state chartering authority.
In it joint declarationTreasury Secretary Janet L. Yellen, Federal Reserve Board Chairman Jerome H. Powell and FDIC Chairman Martin J. Gruenberg said, “This step will ensure that the U.S. banking system .to provide credit to households and businesses in a way that promotes strong and sustainable economic growth.”
The senior management of both banks have been removed and shareholders and certain unsecured debt holders will not be protected. However, depositors will have access to all their money starting March 13 and taxpayers will bear no loss. Any loss incurred to support uninsured depositors will be recovered through a special assessment by banks, as required by law.
The Federal Reserve Board also announced Sunday that it would make additional funds available to eligible depository institutions to ensure banks have the ability to meet the needs of all their depositors. “The US banking system remains resilient and on a solid footing,” the statement said. “Those reforms combined with today’s actions demonstrate our commitment to take the necessary steps to ensure that depositors’ savings remain safe.”
“Decisive action” to protect depositors’ savings is a welcome step; but also a showcase example of why Bitcoin was created. The “Chancellor on the Brink” message included within the genesis block was an express comment by Satoshi Nakamoto on his inspiration for the technology. We now see a new iteration of this inevitable consequence of fiat currency systems: and therefore a new point of evidence for why Bitcoin exists.
