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Tuesday, March 28, 2023

Financial world: Silicon Valley Bank: US government announces depositor protection

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There is no emergency capital increase for the money house specializing in start-up financing. Instead, the customers are saved.

After the difficulties of the US start-up financier Silicon Valley Bank, the US government announced that all deposits with the bank would be protected. Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell and the US deposit insurance company FDIC issued a joint statement on Tuesday evening (local time) that all depositors would be fully protected and would be able to access all their money from Monday. “The taxpayer will not suffer any losses related to the resolution of Silicon Valley Bank,” it said.

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A similar exemption also applies to Signature Bank in New York, which was closed by its state licensing authority on Sunday. All depositors of this institution would also be compensated. These are important measures to protect the US economy by increasing public confidence in the US banking system. The US banking system is still resilient and stands on solid ground.

A senior Treasury official stressed that the aim was to help depositors, not to bail out the banks. It is not a situation like the financial crisis of 2008. Yellen had previously ruled out a government bailout of the Silicon Valley Bank. In the financial crisis a few years ago, the government intervened in this way, Yellen said in response to a question in an interview with the television station CBS. But she emphasized: “We won’t do that again.”

On Friday, the Silicon Valley Bank, which specializes in start-up financing, was temporarily closed after a failed emergency capital increase and placed under state control. This caused unrest around the world.

Source: Stern

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