U.S. President Joe Biden has vowed to hold those responsible for the collapse of Silicon Valley Bank and Signature Bank accountable. He also assured Americans that their deposits were safe.
The New York District of Financial Services took possession of Signature Bank on March 12, citing its closure as a protective measure for the US economy and to strengthen public confidence in the banking system.
Federal Reserve announced a $25 million fund aimed at backstopping certain banks that could face liquidity issues in the future. Biden tweeted on March 13, that he was pleased with the solution and that he was “firmly committed” to holding those responsible “fully accountable.” He added that he would “have more to say” in an address on Monday, March 13.
Politicians react to the federal regulator’s actions
US Senator Sherrod Brown and Representative Maxine Waters shared praise over the recent federal regulator actions aimed at stemming contagion from the recent banking collapses.
A March 12 statement by the US Senate Banking and Housing Committee stated that both insured and uninsured SVB depositors would be covered. The statement also called for regulators to ensure the banking system remains stable, strong, and resilient and that depositors’ money is safe.
US Securities Exchange Commission Chairman Gary Gensler doubled down on his agency’s pursuit of wrongdoers, without naming any industries in particular.
The chairman reinforced that the SEC would be on the lookout for violators of US securities laws in a March 12 statement. The SEC would investigate and bring enforcement actions if it found any violations of federal securities laws.
Silicon Valley Bank and Signature Bank collapses
Silicon Valley Bank, which specializes in venture-capital financing largely in the tech sector, failed after a run on deposits left it unable to stay afloat on its own.
On March 12, New York regulators closed another lender, Signature Bank, in a sign of how fast the financial bleeding was occurring. Signature Bank is the third-largest bank failure in US history, with more than $110 billion in assets.
In a related development, Circle’s USD Coin (USDC) depegged to as low as $0.88 on March 11 after the shuttering of SVB. Of Circle’s $40 billion USDC reserves, $3.3 billion is held by SVB.
USDC is nearly back to $1 after the Federal Reserve confirmed that all customer deposits at Signature Bank and SVB would be made in “whole.”
