Fed quells fears among SVB, Signature Bank depositors by announcing emergency measures
By MYBRANDBOOK
After the swift collapse of the Silicon Valley Bank late last week, U.S. regulators stepped in to take control of Signature Bank, while also announcing emergency measures to ease fears among depositors. The measures, which include guaranteeing all deposits of SVB, were designed to shore up wavering confidence in the banking system. They were jointly announced by the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp.
Regulators announced they had taken control of Signature Bank, one of the main banks for cryptocurrency companies, on Sunday. A senior Treasury official said the steps didn’t constitute a bailout because stock and bondholders in SVB and Signature wouldn’t be protected.
The Fed and Treasury separately said they would use emergency-lending authorities to make more funds available to meet demands for bank withdrawals, an additional effort to prevent runs on other banks.
“This should be enough to stop the depositor panic," said William Dudley, who served as president of the New York Fed from 2009 to 2018. “What it tells you is that risks to the financial system are not just tied to the big money-center banks."
Officials took the extraordinary step of designating SVB and Signature Bank as a systemic risk to the financial system, which gives regulators flexibility to guarantee uninsured deposits.
Officials said that depositors at SVB will have access to all of their money from Monday.
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