Financial regulators said on Sunday evening that depositors of the bankrupt Silicon Valley Bank will have access to all of their money from Monday, March 13.
In a joint statement, the heads of the Federal Reserve, the Treasury Department and the FDIC said: “Upon receiving a recommendation from the boards of directors of the FDIC and the Federal Reserve and after consultation with the President, Secretary Yellen approved actions which enabled the FDIC to pass the 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 beginning Monday, March 13. The taxpayer will be the taxpayer.”
The Federal Reserve also said it will provide banks with funding through a new facility to ensure banks can meet all depositor withdrawals.
The funding from the Fed 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 that pledge U.S. Treasury bonds, government debt and mortgage-backed securities, and other eligible assets as collateral.
According to the Fed, the BTFP will provide an additional source of liquidity over high-quality securities, removing the need for an institution to quickly sell those securities in times of stress.
The Fed said it is closely monitoring developments in the financial markets.
“The Federal Reserve is prepared to address any liquidity issues,” the central bank said in a press release. “This action will strengthen the banking system’s capacity to safeguard deposits and ensure the continued supply 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 shut down by the state’s charter authority on Sunday. All depositors of this institution will be made healthy. As with the Silicon Valley Bank resolution, 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, after Washington Mutual, the second largest bank failure in U.S. history. It is also the first bank to go bankrupt since 2020.
California state regulators seized the Santa Clara-based institution and appointed the Federal Deposit Insurance Corporation as trustee, meaning the FDIC will be able to sell assets and return funds to insured depositors.
This story is the latest news and will be updated.
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