After the difficulties of the US start-up financier Silicon Valley Bank, the US government has announced a protection of all deposits with the bank. Treasury Secretary Janet Yellen, Federal Reserve Chairman Jerome Powell and the US deposit insurance FDIC announced on Sunday evening (local time) in a joint statement that all depositors would be fully protected and could access all their money from Monday. "The taxpayer will not have to bear any losses related to the resolution of Silicon Valley Bank," it said.
A similar exemption applies to Signature Bank in New York, which was shut down by its state licensing authority on Sunday. All depositors of this institution would also be compensated. These are important measures to protect the American economy by increasing public confidence in the American banking system. The US banking system remains resilient and on solid footing.
The FDIC only protects deposits up to an amount of 250,000 dollars (about 234,000 euros) per customer and bank. According to a report in the Washington Post, however, the Bundesbank law would allow the deposit insurance fund to protect unsecured deposits if systemic risks would otherwise threaten.
"Help, but no rescue"
A high-ranking official of the Ministry of Finance stressed that it was about helping depositors, not about rescuing the banks. It is not a situation like the financial crisis of 2008.
Yellen had previously ruled out a government bailout of Silicon Valley Bank. In the financial crisis a few years ago, the government intervened in this way, Yellen said in response to a question in an interview with CBS. However, she stressed: "We will not do that again."
On Friday, Silicon Valley Bank, which specializes in start-up financing, was temporarily closed and placed under state control after a failed emergency capital increase. This had caused unrest worldwide.
The financial institution had run into massive difficulties as a result of billions in losses in the sale of securities. SVB is a little-known bank to the general public, but has played a major role in financing start-ups in the US since the 1980s.
US President Joe Biden promised on Sunday to hold those responsible for the bankruptcy of the banks accountable. "The American people and American companies can trust that their bank deposits are there when they need them," the Democrat continued. The head of state announced that he wanted to comment on the banking system on Monday.