The U.S. government has decided to fully guarantee all customer deposits in the closed Silicon Valley Bank (SVB), regardless of the insurance coverage limits. Additionally, to minimize the impact of SVB's bankruptcy, it will provide loans to banks for deposit withdrawals if necessary.
On the 12th (local time), the U.S. Treasury Department, Federal Reserve (Fed), and Federal Deposit Insurance Corporation (FDIC) jointly announced in a statement that Treasury Secretary Janet Yellen reported the recommendations of the Fed and FDIC to President Joe Biden, who approved a resolution to fully protect all depositors.
Accordingly, all depositors will have access to their full deposits starting from the 13th, and the Treasury stated that taxpayers will not bear any costs related to SVB's losses.
In the statement, they said, "Today, we are taking decisive action to strengthen public confidence in the banking system and protect the U.S. economy."
However, the Treasury noted that some shareholders and unsecured creditors will not be protected, and that SVB's senior management has taken responsibility for the incident and stepped down.
A senior U.S. Treasury official emphasized, "This action is not a bailout for corporations but a protection for depositors."
The Treasury also announced that similar measures have been prepared for Signature Bank, which was closed by New York state financial authorities on the same day.
Earlier, California state financial authorities shut down SVB on the 10th due to liquidity issues, which had served as a financial lifeline for U.S. startups. Following this, stocks of Signature Bank, First Republic Bank, and others plunged more than 20% in a single day, triggering aftershocks.
The U.S. economic media outlet CNBC reported that Signature Bank is one of the major banks in the virtual asset industry, with total assets of $110.4 billion (146.0592 trillion KRW) and total deposits of $88.6 billion (117.2178 trillion KRW) as of December last year.
Meanwhile, in relation to this, the Fed announced the establishment of a new fund (BTFP) to support liquidity for banks.
The Fed stated, "We will support banks with loans for deposit withdrawals if necessary," and plans to lend funds for one year to banks that provide collateral such as U.S. Treasury securities and mortgage-backed securities (MBS).
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
