Status: 03/13/2023 09:09 a.m
In view of the difficulties of several US banks, there is great concern worldwide about further bankruptcies. The US government therefore intervened. To protect depositors and not banks, as she points out.
After the bankruptcy of California’s Silicon Valley Bank (SVB), US authorities are trying to calm investors down with a series of measures. All deposits in the money house, which specializes in financing technology companies, should be protected, as US Treasury Secretary Janet Yellen, the head of the US Federal Reserve (Federal Reserve), Jerome Powell, and the US deposit insurance company FDIC jointly announced. The customers could access all their money.
A similar regulation also applies to Signature Bank in New York, which has been closed by its state licensing authority.
In addition, the taxpayer should not have to bear any losses in connection with the liquidation of the SVB. In the US, deposits are actually only protected up to a limit of $250,000. The Fed also intends to provide banks with additional funding. This is to be realized via a new program that offers the institutes loans with a term of up to one year.
Two banks are now temporarily closed
The Silicon Valley Bank, which specializes in start-up financing, had previously been temporarily closed and placed under state control after a failed emergency capital increase. This caused unrest around the world. The SVB, founded in 1983, had seen huge withdrawals of funds in the past few days as a result of liquidity concerns.
The SVB shares were suspended from trading after a price slide due to the acute emergency. Other banks also came under considerable pressure on the stock exchange. Fear of loan defaults in the banking sector increased again. The British bank HSBC has announced that it intends to take over the British subsidiary of SVB.
The US regulators also closed another bank, Signature Bank. As the authorities announced, the US deposit insurance fund should act as the administrator of the money house. Deposits as of March 8 were about $89 billion.
Worldwide concern about further bankruptcies
The problems of the US banks also caused uncertainty on the European stock exchanges. The US Treasury, the Federal Reserve and the FDIC tried to counteract the general nervousness. The US banking system remains resilient and is on solid footing, the joint statement said.
The steps now decided are important measures to protect the US economy by strengthening public confidence in the American banking system. “The taxpayer will not suffer any losses related to the resolution of Silicon Valley Bank,” it said. This also applies to the Signature Bank.
US Treasury Secretary Yellen had previously ruled out a government bailout of the SVB. “During the financial crisis, we jumped to the side of investors and shareholders of systemically important big banks. Since then, however, reforms have come into force. This means that we will not do something like this again,” said the former Federal Reserve Chair. She also stressed that the country’s banking system is better capitalized and more resilient than it was during the 2008 banking crisis.
Biden: Hold those responsible accountable
US President Joe Biden emphasized in a written statement that the solution now found is about protecting American workers and small businesses and keeping the financial system secure. “The American people and American companies can have confidence that their bank deposits are there when they need them,” Biden said.
He will comment on how to proceed to maintain a resilient banking system and protect economic recovery, he announced. “I am determined to hold those responsible for this mess accountable and to continue our efforts to strengthen supervision and regulation of larger banks.”
With information from Antje Passenheim, ARD Studio New York
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Antje Passenheim, ARD New York, March 13, 2023 9:03 a.m