Washington – President Joe Biden Monday sought to reassure customers of Silicon Valley Bank and Signature Bank that their money was safe — insured by the Deposit Insurance Fund — but said investors in the failed banks’ securities weren’t going to get the same guarantees.
In a White House speech, Biden said, “Investors in banks will not be protected.” “They deliberately took risks and when the risk didn’t pay off, investors lost their money. That’s how capitalism works.”
The nation’s top bank regulators on Sunday announced the Federal Deposit Insurance Corporation and the Federal Reserve fully cover the deposit both in failing banks and in relying on Wall Street and large financial institutions – not taxpayers – to pay bills, Signature Bank in New York, closed on sunday On fears of the same systemic contagion as SVB, cryptocurrency has been a popular funding source for companies.
“The FDIC took control of SVB’s assets on Friday and Signature over the weekend,” Biden said. “All customers who had deposits with these banks can rest assured that they will be protected and will have access to their money today.”
The Treasury Department has designated both SVB and Signature as systemic risks, giving it the authority to open both institutions. The FDIC’s Deposit Insurance Fund, not taxpayer money, would be used to cover the depositors, many of whom had deposits in banks well above the $250,000 typically covered by the FDIC.
“There will be no loss by the taxpayers,” Biden insisted on Monday. “I’m going to repeat it — there will be no loss by the taxpayers. Instead, the money will come from fees that banks pay to the Deposit Insurance Fund.”
Any losses to the Deposit Insurance Fund would be covered by a special assessment imposed on federally insured banks, according to a joint statement issued by the FDIC, the Federal Reserve and the Treasury Department.
The banks’ senior management will be fired after the FDIC takeover.
“Americans can have confidence that the banking system is safe,” Biden said. “Your deposits will be there when you need them.”