The White House, Department of the Treasury, and other federal banking regulators swung into action over the weekend to prevent the failure of two banks with $264 billion in combined deposits from turning into a full-blown economic crisis.
The Treasury, Federal Reserve Board, and Federal Deposit Insurance Corporation (FDIC) announced Sunday all customer deposits at Silicon Valley Bank ($175 billion in deposits) and New York-based Signature Bank ($89 billion) would be fully protected. On Friday, the FDIC and California banking regulators closed Silicon Valley Bank (SVB); the FDIC and the New York State Department of Financial Services followed suit with Signature Bank on Sunday.
Is this move by regulators to ensure depositers a bailout? Depends on who you ask. Analysts on Bloomberg TV on Monday were calling the move a “bail in,” which the Bank of England defines as using investor funds, rather than taxpayer money, to bear losses when a firm fails.
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President Joe Biden called on federal banking agencies to consider reforms that would largely reverse changes to regulation made during the Trump administration regarding liquidity requirements, stress tests, and more.
President Joe Biden is calling on Congress to “do more to hold senior bank executives accountable” since the market turmoil that has followed the collapses of Silicon Valley Bank and Signature Bank.
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