Digital Assets: Federal Support Action For Resolving SVB And Signature Bank Crises
Signature Bank was the third bank to fail last week. It was seized by the New York Department of Financial Services (DFS) in order to protect depositors. DFS appointed the Federal Deposit Insurance Corporation (FDIC) as receiver of the bank.
The US Government has taken swift action to stem the economic backlash from the failures of Silvergate Bank, Silicon Valley Bank, and Signature Bank. While Silvergate and Signature were both crypto-focused banks, Silicon Valley was the go-to bank for the venture capital industry. Silvergate, however, voluntarily chose to down shutters.
A statement from the Department of Treasury detailed a concerted strategy to protect depositors at SVB and Signature.
According to the statement, the Secretary of the Treasury, Federal Reserve Board Chair, and FDIC Chairman have jointly agreed to take actions to strengthen public confidence in the U.S. banking system by protecting depositors and providing access to credit.
They have approved actions to complete the resolution of Silicon Valley Bank and Signature Bank, ensuring that all depositors will be made whole and no losses will be suffered by taxpayers.
Shareholders and certain debtholders will not be protected, and senior management has been dismissed.
Any losses incurred by the Deposit Insurance Fund will be recovered through a special assessment on banks.
The Federal Reserve Board will also make additional funding available to eligible depository institutions to ensure they can satisfy the demands of all depositors.
“The U.S. banking system remains resilient and on a solid foundation, in large part due to reforms that were made after the financial crisis that ensured better safeguards for the banking industry,” said the statement. “Those reforms combined with today’s actions demonstrate our commitment to take the necessary steps to ensure that depositors’ savings remain safe.”
Related Story: Troubles At Silicon Valley Bank Trigger Warnings From Top Drawer VC Firms
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