The Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) released an emergency plan on Sunday to avoid contagion from the collapse of Silicon Valley Bank.
“Today we are taking decisive action to protect the US economy by strengthening public confidence in our banking system. This step will ensure that the US banking system continues to perform its vital functions of protecting deposits and provide access to credit to households and businesses in a way that promotes strong and sustainable economic growth.
After receiving a recommendation from the FDIC and Federal Reserve Boards of Directors, and consulting with the President, Secretary Yellen approved actions that allow the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that protects completely to all depositors. . Depositors will have access to all their money starting Monday, March 13. The taxpayer will not bear the losses associated with the resolution of Silicon Valley Bank.
We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state charter authority. All depositors of this institution will be upright. As with the Silicon Valley Bank resolution, the taxpayer will not take a loss.
Shareholders and certain unsecured debt holders will not be protected. Senior management has also been eliminated. Any loss from the Deposit Insurance Fund to support uninsured depositors will be recovered through a special assessment of banks, as required by law.
Finally, the Federal Reserve Board announced Sunday that it will make additional funds available to eligible depository institutions to help ensure banks have the ability to meet the needs of all their depositors.
The US banking system remains resilient and on solid footing, largely due to post-financial crisis reforms that ensured better safeguards for the banking industry. Those reforms combined with today’s actions demonstrate our commitment to take the necessary steps to ensure that depositors’ savings remain safe.”
The statement was issued by Treasury Secretary Janet L. Yellen, Federal Reserve Board Chairman Jerome H. Powell, and FDIC Chairman Martin J. Gruenberg.
