‘Depositors will have access to all of their money…’: Treasury, Federal Reserve & FDIC’s move to provide relief to start-ups

In a move that will give start-ups a huge relief, US regulators including the Treasury, the Federal Reserve and Federal Deposit Insurance Corporation (FDIC) have announced that depositors of the troubled Silicon Valley Bank will have “access to all of their money” starting March 13. “No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer,” the US bodies said in a joint statement. 
 
The statement which was issued by Janet L. Yellen (Secretary of the Treasury), Jerome H. Powell (Chair at Federal Reserve Board), and Martin J. Gruenberg (Chairman of FDIC) stated, “Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system. 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.”

The statement also announced a similar systemic risk exception for Signature Bank, New York, which was closed by its state chartering authority on Sunday. 
 
The last few days saw some shocking developments unravel after it was announced that SVB was to be shut down by US regulators on Friday after the latter took control of SVB’s customer deposits. 
 
The US bodies revealed that “shareholders and certain unsecured debt holders will not be protected.” In addition, the US regulators have also removed the senior management following the aftermath. “Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law,” the statement read.
 
In a bid to help banks and ensure it meets the needs of its depositors, the Federal Reserve announced that it will provide “additional funding” to eligible depository institutions. 

“The U.S. banking system remains resilient and on a solid foundation, in large part due to reforms that were made after the financial crisis that ensured better safeguards for the banking industry. Those reforms combined with today's actions demonstrate our commitment to take the necessary steps to ensure that depositors' savings remain safe,” the statement noted.

Also Read: After SVB failure, US acts to shore up confidence in banking system