Good news for all the depositors of Silicon Valley Bank (SVB) has arrived. From Monday, March 13, all the SVB depositors will have access to all their funds without any upper limits on withdrawals or restrictions. According to the Federal Deposit Insurance Corporation, the bank deposits are insured up to $250,000 but the regulators have the authority to remove this limit to insure all depositors.
Following the failure of Silicon Valley Bank, US officials rushed to calm concerns about the stability of the financial system on Sunday by establishing a new safeguard for banks. The initiatives, which were jointly announced by the Treasury Department, Federal Reserve, and Federal Deposit Insurance Corp., are aimed at restoring trust in the banking system after SVB’s failure sparked concerns about knock-on repercussions.
“Despite the regrettable loses for shareholders, and the almost inevitable market jitters, Yellen has made the sensible decision at this stage to bring stability and confidence into the critical banking sector. The fall out of not doing so could have had serious, far-reaching consequences for the US, and therefore global, economy,” says Nigel Green, CEO and founder of deVere Group, one of the world’s largest independent financial advisory organisations.
Key highlights of the joint statement issued by the Department of the Treasury, Federal Reserve, and FDIC are:
Depositors will have access to all of their money starting Monday, March 13.
Resolution was arrived at after receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President.
Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors.
No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.
A similar systemic risk exception for Signature Bank was also announced.
As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.
Shareholders and certain unsecured debt holders will not be protected.
Senior management has also been removed.
Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.
The Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors.