Statement from the US Department of the Treasury, the Fed and the FDIC on bank failures

The US Department of the Treasury, the US Federal Reserve (Fed) and the US Federal Deposit Insurance Corporation (FDIC) announced decisions on post-bankruptcy deposit protection of the Bank of Silicon Valley (SVB), and SVB clients will be able to access their deposits starting Monday.

In a statement by US Treasury Secretary Janet Yellen, Fed Chair Jerome Powell and FDIC Chairman Martin Gruenberg, decisive action was taken to protect the US economy. by strengthening public confidence in the banking system.

“This step will ensure that the US banking system continues to fulfill its vital role of protecting deposits and providing access to credit to households and businesses in a manner that fosters strong and sustainable economic growth,” the statement said.

CONSULTED WITH BIDEN

In the statement, it was noted that US Treasury Secretary Yellen, after listening to the FDIC and Fed recommendations and consulting with US President Joe Biden, approved the actions that will ensure compliance with the FDIC’s SVB decision in a manner that protects all depositors.

“From Monday, March 13, depositors will have access to all their funds,” the joint statement said. Any loss associated with the SVB decision will not be borne by the taxpayers.” expression was used.

THERE IS A SIMILAR RISK FOR THE FIRM BANK

In the statement, in which it was reported that New York-based Signature Bank also failed, it was assessed that “we are announcing a similar systemic risk situation for Signature Bank, which was closed by the state authority.”

In the statement, which indicated that all depositors of this institution will be integrated, it was emphasized that taxpayers will not bear any loss related to this bank, as in the SVB’s decision. The statement noted that shareholders and certain unsecured creditors will not be protected.

In the statement from the Treasury Department, the Fed and the FDIC, it was indicated that the losses suffered by the FDIC in supporting uninsured depositors will be compensated through a special assessment of banks, as required by law.

ADDITIONAL FUND FROM THE FED

Noting that the Fed also announced that it will provide additional financing to eligible depositors to help banks meet the needs of all depositors, the statement emphasized that the US banking system is on a strong and resilient footing, largely due to reforms made after the financial crisis

In the statement, it was noted that these reforms, together with the new steps taken, show a commitment to take the necessary measures to ensure that depositors’ savings remain safe.

On the other hand, in another Fed statement, it was indicated that the additional financing that will be provided to eligible depository institutions will strengthen the banking system’s ability to protect deposits and will allow the economy to be constantly supplied with money and loans. . “The Fed stands ready to address any liquidity pressure that may arise,” the statement said.

The statement indicated that the Bank Term Financing Program (BTFP) will be created for additional financing that will grant loans to deposit institutions for up to one year, and the US Treasury Department Stabilization Fund of the program.

In the statement, Yellen’s approval of actions that will allow the FDIC to supplement the decisions of SVB and Signature Bank in a way that fully protects all depositors, both insured and uninsured, will reduce stress on the financial system, support the financial stability and will have the greatest impact on businesses, households, taxpayers and the economy as a whole. (AA)