An announcement from federal regulators was issued this past weekend explaining that they will be fully backing all depositors of Silicon Valley Bank, issuing a guarantee that the depositors will be paid back in full after the bank fell through last week.
This announcement from late last Sunday was issued by a united group of Treasury Secretary Janet Yellen, Federal Reserve Board Chair Jerome H. Powell, and FDIC Chairman Martin J. Gruenberg.
“Depositors will have access to all of their money starting Monday, March 13,” the statement explained. “No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.”
The federal agencies also unveiled that a second bank was being closed out in New York by officials within the state.
“We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority,” expressed the statement. “All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.”
“Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed,” the statement went on. “Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.”
SVB officially announced a share sale of $1.75 billion this past Wednesday after the company was forced to deal with heavy losses due to the liquidation of a $21 billion bond portfolio, sparking extreme concern throughout various venture capital firms and startups with ties to the company about the overall safety of their investments and assets. As the 16th largest bank within the United States and the largest of its kind within Silicon Valley, SVB lends to over half of publicly traded venture-backed technology and healthcare companies.
The Federal Deposit Insurance Corporation explained this past Friday evening that SVB had been officially shut down by the California Department of Financial Protection and Innovation.