US authorities take extraordinary measures after Silicon Valley bank's bankruptcy

Eva Homicio


Typewriter ©

US Regulators Take Unprecedented Steps Following Silicon Valley Bankruptcy

On March 12, US regulators announced unprecedented measures aimed at bolstering confidence in the banking system, in response to the bankruptcy of Silicon Valley Bank, which threatened to precipitate a wider financial crisis, according to Reuters.

In an effort to prevent a crisis, regulators announced that clients of the bankrupt bank would have access to all their deposits, starting from Monday, and also created a new mechanism to provide banks with access to emergency funds. The Federal Reserve also streamlined the process for banks to borrow in emergency situations.

Regulators quickly closed New York-based Signature Bank, which had come under pressure in recent days.

These measures helped boost Wall Street futures on Monday, and supported global markets. However, ongoing concerns about the financial sector led to declines in the stocks of major banking companies, including HSBC Holdings, Standard Chartered Bank, Japanese Mitsubishi UFJ, and Singapore's DBS.

Silicon Valley Bank, a cornerstone of the startup economy, was a product of years of easy credit and had unique risks that made it particularly vulnerable. But after a massive run on the bank last week, concerns quickly spread that other regional banks might be similarly exposed.

As the Federal Reserve prepares to continue raising interest rates, investors have voiced concerns that the financial system may not have fully overcome its problems.

The next Fed meeting is scheduled for March 21-22.

In a joint statement, US Treasury Secretary Janet Yellen, Fed Chairman Jerome Powell, and Federal Deposit Insurance Corporation Chairman Martin Gruenberg announced that all depositors, including those whose funds exceed the maximum level of government insurance, will receive their money.

Treasury officials also stated that depositors of Signature Bank, which was closed on Sunday by the New York state financial regulator, will be reimbursed without loss to taxpayers.

Both Silicon Valley Bank and Signature Bank had a clientele focused on the technology sector, and securities on their balance sheets were reduced as interest rates rose.

While all customer deposits will be protected, the new policy adopted on Sunday will not affect holders of SVB and Signature Bank stocks and bonds, according to the Treasury Department.

Related Content

News -

Poland builds the most powerful army in Europe

Despite being a member of the North Atlantic Alliance, Poland plans to strengthen its armed forces.
Vladimir Putin
News -

International Criminal Court has issued an arrest warrant for the President of Russia

The International Criminal Court has issued an arrest warrant for the President of Russia, Vladimir Putin. 
News -

President of Turkey announced a large-scale construction of housing for citizens affected by the earthquake

Turkey's President Recep Tayyip Erdogan has announced plans to build over 300,000 homes for those affected by recent earthquakes in the country.
vladimir putin and Xi Jinping
News -

An informal meeting took place in the Kremlin between the President of Russia, Vladimir Putin, and the leader of China, Xi Jinping

Xi Jinping's visit came three days after the International Criminal Court in The Hague issued an arrest warrant for Putin.
News -

China lifts visa restrictions for all foreign citizens

The Consular Department of the Ministry of Foreign Affairs of China has announced that starting from March 15th, all categories of visas for foreign citizens entering China will once again be considered and issued.