A joint statement ensured that all customer deposits at the respective banks will be honored by the federal government.
The U.S. Treasury, Federal Reserve, and the Federal Deposit Insurance Corporation (FDIC) announced on Sunday that they would take “decisive actions” to strengthen public confidence in the U.S. banking system. This decision came after the FDIC and Federal Reserve recommended Silicon Valley Bank and Signature Bank be placed under systemic risk exceptions. The move would allow the FDIC to resolve Silicon Valley Bank, based out of Santa Clara, California, in a manner that “fully protects” depositors’ money and ensures their access to credit. The same would apply to Signature Bank, based out of New York, New York, which was closed today by its state chartering authority.
In the joint statement, Secretary of the Treasury Janet L. Yellen, Federal Reserve Board Chair Jerome H. Powell, and FDIC Chairman Martin J. Gruenberg said, “This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth.”
The senior management of both banks has been removed, and shareholders and certain unsecured debtholders will not be protected. However, depositors will have access to all of their money starting on March 13, and no losses will be borne by taxpayers. Any losses incurred to support uninsured depositors will be recovered by a special assessment on banks, as required by law.
The Federal Reserve Board also announced on Sunday that it would make additional funding available to eligible depository institutions to ensure banks have the ability to meet the needs of all their depositors. “The U.S. banking system remains resilient and on a solid foundation,” the statement said. “Those reforms combined with today’s actions demonstrate our commitment to take the necessary steps to ensure that depositors’ savings remain safe.”
The “decisive actions” to protect depositors’ savings is a welcome move; but also a showcase example of why Bitcoin was created. The “Chancellor on the Brink” message included within the genesis block was an express comment by Satoshi Nakamoto on their inspiration for the technology. We now see a new iteration of this inevitable consequence of fiat currency systems: and so a new point of evidence for why Bitcoin exists.