WASHINGTON — President Joe Biden sought to guarantee customers of Silicon Valley Bank and Signature Bank on Monday that their money was protected — insured by the Deposit Insurance Fund — but said investors within the failed banks’ securities aren’t going to get the identical guarantee.
“Investors within the banks is not going to be protected,” Biden said in a White House speech. “They knowingly took a risk and when the chance didn’t repay, the investors lose their money. That is how capitalism works.”
The nation’s top bank regulators on Sunday announced the Federal Deposit Insurance Corp. and Federal Reserve would fully cover deposits at each failed banks and depend on Wall Street and huge financial institutions — not taxpayers — to foot the bill. Signature Bank in Latest York, which was shuttered Sunday over similar systemic contagion fears as SVB, had been a well-liked funding source for cryptocurrency corporations.
“The FDIC on Friday took control of SVB’s assets and over the weekend Signature’s,” Biden said. “All customers who had deposits in these banks can rest assured they shall be protected they usually’ll have access to the cash as of today.”
The Treasury Department designated each SVB and Signature as systemic risks, giving it authority to unwind each institutions. The FDIC’s Deposit Insurance Fund, not taxpayer money, shall be used to cover depositors, lots of whom had significantly greater than the $250,000 deposited on the banks that is generally covered by the FDIC.
“”No losses shall be borne by the taxpayers,” Biden stressed Monday. “I will repeat that — no losses shall be borne by the taxpayers. As a substitute the cash will come from the fees that banks pay into the Deposit Insurance Fund.”
Any losses to the Deposit Insurance Fund shall be covered by a special assessment levied on federally insured banks, in accordance with a joint statement issued by the FDIC, Federal Reserve and Treasury Department.
Senior management of the banks shall be fired following the FDIC takeover.
“Americans can believe that the banking system is protected,” Biden said. “Your deposits shall be there whenever you need them.”