A joint declaration guarantees that all customer deposits in the respective banks will be honored by the federal government.
The US Treasury, Federal Reserve and Federal Deposit Insurance Corporation (FDIC) announced on Sunday that they would take “decisive action” to bolster public confidence in the US banking system. The move came after the FDIC and Federal Reserve recommended that Silicon Valley Bank and Signature Bank be placed under systemic risk exceptions. The move would allow the FDIC to resolve Silicon Valley Bank, based in Santa Clara, Calif., in a way that “fully protects” depositors’ money and guarantees their access to credit. The same would apply to Signature Bank, based in New York, New York, which was shut down today by its state charter authority.
In the joint statementTreasury Secretary Janet L. Yellen, Federal Reserve Board Chairman Jerome H. Powell, and FDIC Chairman Martin J. Gruenberg said, “This step will ensure that the U.S. banking system continues to play its vital role of protecting deposits and providing access to credit to households and businesses in a way that promotes strong and sustainable economic growth.”
Senior management at both banks has been removed, and shareholders and some unsecured creditors will not be protected. However, depositors will have access to all their money from March 13 and no losses will be borne by taxpayers. Any loss incurred to support uninsured depositors will be recovered through a special levy on the banks, as required by law.
The Federal Reserve Board also announced Sunday that it would make additional funds available to eligible deposit-taking institutions to ensure banks have the capacity to meet the needs of all of their depositors. “The U.S. banking system remains resilient and rests on solid foundations,” the statement said. “These reforms combined with today’s actions demonstrate our commitment to taking the necessary steps to ensure the safety of depositors’ savings.”
The “decisive actions” to protect depositors’ savings are a welcome initiative; but also a showcase example of why Bitcoin was created. The “Chancellor on the Brink” message included in the genesis block was an express comment from Satoshi Nakamoto on their inspiration for the technology. We now see a new iteration of this inevitable consequence of fiat currency systems: and thus a new point of evidence as to why Bitcoin exists.