Regulators Close Second Bank and Move to Ensure Deposits

[pnwmom]

Source: NYT

Federal regulators announced on Sunday that they would ensure that all depositors of Silicon Valley Bank -- which failed Friday -- were paid back in full as they rushed to contain fallout from the collapse of the large institution.

The Federal Reserve, Treasury and Federal Deposit Insurance Corporation announced in a joint statement that "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."

The agencies also said that they would enact a "similar systemic risk exception for Signature Bank," which the government disclosed was closed on Sunday by its state chartering authority.

The move came after the F.D.I.C. on Friday took over the bank on Friday, putting nearly $175 billion in customer deposits under the regulator's control. The bank's failure, the largest since the depths of the financial crisis in 2008, has raised concerns that other financial firms could suffer similar fates as rising interest rates put pressure on the banking sector and as nervous depositors consider pulling out their money.

Read more: https://www.nytimes.com/2023/03/12/business/janet-yellen-silicon-valley-bank.html

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All depositors will be made whole, and taxpayers will not have to pay for this.

This is the key point. Taxpayers aren't on the hook, but depositors won't lose their savings.

The banking system as a whole pays into a fund that will be tapped for this.

[bucolic_frolic]

1. Glad there's no contagion

insolvency, feared run, multiple collapse - whatever you want to call it.

[FBaggins]

4. Looks that way - but too early to be sure

This move makes it more likely contagion will be avoided.

And, if all goes well, my guess is that it won’t take any substantial payments from the other banks.

[Justice matters.]

3. Buy crypto high, take risks with other people's money then when crypto goes bust...

Don't worry, all the solvent-banks-not-buying-online-scams-high customers will foot the bill through high administrative fees and bloated interest rates.

It's always the last payer in the chain who will foot the bills, not the multibillionaires at the top.

Hey! No punishment! Let's go do it again.

[yaesu]

5. "Signature is one of the main banks to the cryptocurrency industry" yep, everything crypto connected

seems to be unravelling. I remember when Tesla sunk a billion or so into crypto before the crash, I wonder how they were effected by it.

[republianmushroom]

6. No bail out with tax payers money.

[pnwmom]

7. That's what the Fed is saying. The depositors will be protected, but it won't require taxpayer funds

[James48]

8. Yeh? Well, let's see if Wall Street agrees.

If other banks start failing for similar interest rate issues, do you think the Fed will think again about the uspeed of these interest rate hikes?

[pnwmom]

9. Other bank stocks had already started falling. Hopefully today's measures will stop that. nt

[LetMyPeopleVote]

10. Former board member of Signature Bank:

Link to tweet