In a joint statement, financial agencies and the Treasury Department said Silicon Valley Bank customers will have access to “all their money” starting Monday and U.S. taxpayers they will not pay for the disasterafter the bank went bust last week.
At the same time, the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC) and the Treasury Department have stated that the “full replacement” to depositors by Signature Bank, another New York-based regional lender with significant cryptocurrency exposure which was closed on Sunday after its stock plummeted.
Authorities in the United States and Europe were trying Monday to allay fears about the health of the banking system after bank failures and closures, by imposing measures to protect deposits.
US authorities announced on Sunday, followed by British ones on Monday, measures to protect the money deposited in the Californian bank Silicon Valley Bank (SVB) and to reassure private customers and companies.
On Sunday, US authorities unveiled sweeping moves to completely bail out clients’ money from the bankrupt SVB and promised other institutions would help meet clients’ needs, while announcing that regulators had shut down a second tech bank.
The Fed comes to the rescue of the banks
In a potentially important precedent, the Fed announced this will have additional funds to help the banks to respond to the needs of its depositors, including withdrawals.
“The US banking system remains resilient and on solid footing,” largely thanks to reforms following the 2008 financial crisis that introduced new safeguards for the banking sector, the agencies said.
For its part, the British government has announced that SVB’s subsidiary in that country has been sold to HSBC, which has said it has acquired it. for the symbolic figure of a pound.
“Silicon Valley Bank (UK) was sold today to HSBC,” the Treasury said in a statement. “SVB UK customers will be able to access their deposits and banking services as usual from today,” he added, referring to this Monday.
US President Joe Biden also spoke to the nation and promised in a statement Sunday evening that he will hold those responsible for the bank failures “accountable”.
The FDIC guarantees deposits, but only up to $250,000 per customer and per bank.
Federal banking law, however, would allow the FDIC to protect uninsured deposits if it would otherwise put the system at risk, the Washington Post reported.
In Germany, the financial regulator said the “crisis situation” at the German branch of SVB “posed no threat to financial stability”.
In France, the Minister of the Economy, Bruno Le Maire, has assured that a “special warning” is not necessary. “I don’t see any risk of contagion,” he told Franceinfo radio.
bags fall
Despite them, European stocks fell on Monday and most Asian indices finished lower, with banking stocks the main hit.
Stock exchanges in Frankfurt and Paris fell about 3%, while Madrid lost 4% and Milan almost 5% at one point and Zurich lost 1.7%.
London fell 2.3%, but losses were limited after HSBC agreed to buy SVB’s UK division for £1 ($1.2).
What happened
On Fridaysthe regulators took control of the SVB, a key lender to American start-ups since the 1980s, after a wave of massive withdrawals from its customers who left the bank struggling to fend for itself.
Hours before Sunday’s joint statement, US Treasury Secretary Janet Yellen said the government wanted to avoid financial “contagion” from SVB’s collapse but ruled out a bailout for the entity.
“We want to make sure that problems that exist in one bank don’t spread contagion to others that are strong,” Yellen said in an interview with CBS.
The Tokyo stock market closed on Monday at a low of 1.11%.
Since Friday, calls for the bailout of the SVB from the technology and financial sectors have been known. However, Yellen assured that the reforms carried out after the 2008 financial crisis they closed the door to that possibility.
The collapse of SVB represents the largest bank failure in the United States since the 2008 crisis by volume of activity.
Agencies
ap
Source: Clarin
Mary Ortiz is a seasoned journalist with a passion for world events. As a writer for News Rebeat, she brings a fresh perspective to the latest global happenings and provides in-depth coverage that offers a deeper understanding of the world around us.