Financial regulators said Sunday night depositors of the failed Silicon Valley Bank will have access to all of their money starting Monday, March 13.
In a joint statement, the heads of the Federal Reserve, Treasury Department, and FDIC said: “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. Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.”
The Federal Reserve also said it will offer funding to banks through a new facility to help ensure banks can meet all depositor withdrawals.
The Fed’s financing will be made available through the creation of a new Bank Term Funding Program (BTFP), offering loans of up to one year to banks, savings associations, and credit unions pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral.
According to the Fed, the BTFP will be an additional source of liquidity against high-quality securities, eliminating an institution’s need to quickly sell those securities in times of stress.
The Fed said it is carefully monitoring developments in financial markets.
“The Federal Reserve is prepared to address any liquidity pressures that may arise,” the central bank said in a release. “This action will bolster the capacity of the banking system to safeguard deposits and ensure the ongoing provision of money and credit to the economy.”
In their joint statement, regulators also announced a similar systemic risk exception for Signature Bank (SBNY), which was closed on Sunday by its state chartering authority. All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.
On Friday, Silicon Valley Bank became the largest bank to fail since Seattle’s Washington Mutual during the height of the 2008 financial crisis and, behind Washington Mutual, the second-largest bank failure in U.S. history. It is also the first bank to fail since 2020.
California state regulators seized the Santa Clara-based institution and appointed the Federal Deposit Insurance Corporation as receiver, meaning the FDIC will be able to sell off assets and return money to insured depositors.
This story is breaking news and will be updated.
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