13 March. Regulators Close Another Bank and Move to Protect Deposits The Treasury, Federal Reserve and Federal Deposit Insurance Corporation unveiled a plan to contain fallout from Silicon Valley Bank’s collapse, and said taxpayers would not bear the costs. The New York Times
Federal regulators announced on Sunday that another bank had been closed and that the government would ensure that all depositors of Silicon Valley Bank — which failed Friday — would be paid back in full as Washington rushed to keep fallout from the collapse of the large institution from sweeping through the financial system. The Federal Reserve, Treasury and Federal Deposit Insurance Corporation announced in a joint statement that “depositors will have access to all of their money starting Monday, March 13.” In an attempt to assuage concerns about who would bear the costs, the agencies said that “no losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.” The agencies also said that they would make whole depositors at Signature Bank, which the government disclosed was shut down on Sunday by New York bank regulators. The state officials said the move came “in light of market events, monitoring market trends, and collaborating closely with other state and federal regulators” to protect consumers and the financial system. President Biden said on Sunday evening that the actions were taken at his direction and that he would deliver remarks about the banking system on Monday morning.
13 March. Economic Policy. U.S. says all deposits at failed bank will be available Monday Regulators also closed down Signature Bank of New York on Sunday, and said they are extending protection to those depositors. The Washington Post
The Biden administration announced Sunday night that all depositors at the failed Silicon Valley Bank would have access to all their money on Monday morning, approving an extraordinary intervention aimed at averting a crisis in the financial system. Authorities said they were also extending protection to depositors of a second bank, Signature Bank of New York, which state regulators closed on Sunday as unease in the financial sector spread. Separately, the Federal Reserve announced that it was creating a lending facility for the nation’s banks, designed to buttress them against financial risks caused by Friday’s collapse of SVB. Fed officials declined to provide a specific figure for the size of that new loan program, but made clear it would be large enough to cover trillions of dollars in potential requests. The series of crisis maneuvers by federal authorities — announced just hours before the start of trading in Asia — reflected the fear that has rippled through the banking sector just a few days after the collapse of Silicon Valley Bank, which many financial experts thought initially was an isolated episode. The decision by Treasury to backstop all deposits at SVB and Signature — not just those up to $250,000 that are insured under federal law — rested on a judgment that it was necessary to avoid a wider “systemic” meltdown. The move will likely ignite a political firestorm over the decision to protect the assets of tech firms, venture capitalists, and other rich people in California. “Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system,” a joint statement from the Treasury Department, the Fed and the Federal Deposit Insurance Corporation said. “This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth.”
FOR EDUCATIONAL PURPOSES.
SOURCE: State of California – Department of Financial Protection and Innovation
BEFORE THE DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION OF THE STATE OF CALIFORNIA
In the Matter of:
SILICON VALLEY BANK
ORDER TAKING POSSESSION OF PROPERTY AND BUSINESS
FINDINGS OF FACT
The Commissioner of Financial Protection and Innovation (“Commissioner”) finds:
Silicon Valley Bank (the “Bank”) is, and was at all times mentioned in these Findings of Fact, a corporation organized under the laws of the State of California and authorized by the Commissioner to transact commercial banking business in the State of California.
2. Liquidity and Insolvency
On March 8, 2023, the Bank announced a loss of approximately $1.8 billion from a sale of investments (U.S. treasuries and mortgage-backed securities). On March 8, 2023, the Bank’s holding company announced it was conducting a capital raise. Despite the bank being in sound financial condition prior to March 9, 2023, investors and depositors reacted by initiating withdrawals of $42 billion in deposits from the Bank on March 9, 2023, causing a run on the Bank. As of the close of business on March 9, the bank had a negative cash balance of approximately $958 million. Despite attempts from the Bank, with the assistance of regulators, to transfer collateral from various sources, the Bank did not meet its cash letter with the Federal Reserve. The precipitous deposit withdrawal has caused the Bank to be incapable of paying its obligations as they come due, and the bank is now insolvent.
II. ULTIMATE FINDINGS
On the basis of Findings of Fact set forth above, the Commissioner finds:
1. ORDER TAKING POSSESSION
State of California – Department of Financial Protection and Innovation
- The Bank’s liquidity position is inadequate, and it cannot reasonably be expected to pay its obligations as they come due.
- The Bank is insolvent.
- The Bank is conducting its business in an unsafe manner due to its present financial condition.
III. ORDER
On the basis of the Ultimate Findings set forth above, separately and cumulatively, pursuant to Financial Code section 592, it is ordered that the Commissioner take possession of the property and business of the Bank, and the Commissioner hereby takes possession of the property and business of the Bank.
DATED: March 10, 2023
San Francisco, California
________________________________________
Commissioner of Financial Protection and Innovation
- news.google.com search “Silicon Valley Bank collapse”
- The Economist. What does Silicon Valley Bank’s Collapse Mean for the Financial System
