TWO days after the United States experienced its second-largest failure in banking history, a third incident followed not long after.
On Friday, March 10, California-based Silicon Valley Bank (SVB) – a commercial bank that was founded in 1983 had a bank run.
On Wednesday, the SVB announced it had sold a bunch of securities at a loss and that it would sell $2.25 billion in new shares to shore up its balance sheet.
This led to depositors hurrying to withdraw their money as anxiety over the bank’s situation spread.
Following this, the bank could no longer cope with massive withdrawals of its customers and its last attempts to raise new money did not succeed.
Silicon Valley Bank has now been placed under the control of the US Federal Deposit Insurance Corporation (FDIC).
Note, Silicon Valley Bank is the 16th largest bank in the United States.
And 2 days later on Sunday the 12th of March, state regulators closed the California-based signature bank marking the third largest failure in us banking history after Washington mutual and Silicon Valley Bank.
In a joint statement by the Treasury, Federal Reserve, and the FDIC on Sunday, they said,
“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,” joint statement by the Treasury, Federal Reserve and the FDIC.
“Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer,” it added.
The joint statement also reads that a similar systemic risk exception will be applied to the signature bank.
As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.
Meanwhile, US President Joe Biden is set to speak about the US banking system on Monday, to reassure Americans after the failures of Silicon Valley Bank and signature bank.
Biden on Sunday vowed to hold “fully accountable” the people responsible for these 2 recent incidents.
To note, the US President also recently unveiled his 6.9-trillion dollar 2024 budget which aims to pay for 3 trillion dollars of the country’s deficit over the next 10 years.
