Silicon Valley Bank depositors will have access to their money starting Monday

Washington: In a step aimed at protecting the US economy by strengthening public confidence in the country’s banking system, the Biden administration announced that depositors of the Silicon Valley Bank will have access to their money from Monday.

After receiving recommendations from the boards of the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve, and consulting with the president, Treasury Secretary Janet Yellen on Sunday approved actions enabling the FDIC to complete its resolution of the Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors, an official statement said.

“The depositors will have access to all their money starting Monday, that is, March 13. No losses associated with the resolution of the Silicon Valley Bank (SVB) will be borne by the taxpayer,” said a joint statement issued by the Department of the Treasury, Federal Reserve, and FDIC.

“We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. All depositors of this institution will be made whole,” it said.

According to the interagency federal statement, shareholders and certain unsecured debt holders, however, will not be protected.

“The senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law,” it said.

Finally, the Federal Reserve Board had on Sunday announced it would make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors, it said.

"This step will ensure that the US 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 statement noted.

According to the statement issued by Yellen, Federal Reserve Board chair Jerome Powell and FDIC chairman Martin Gruenberg, the United States’ banking system remains resilient and on a solid foundation, in large part due to reforms that were made after the financial crisis that ensured better safeguards for the banking industry.

“Those reforms combined with today’s action demonstrate our commitment to take the necessary steps to ensure that depositors’ savings remain safe,” it added.

California-based Silicon Valley Bank, the 16th largest bank in the United States, was closed on Friday by the California Department of Financial Protection and Innovation which later appointed the FDIC as its receiver.