Wednesday, March 29, 2023

The US Federal Reserve bails out all Silicon Valley clients

The financial authorities in the United States of America this Sunday announced a relief plan, which ensures that the depositors of the bankruptcy of Silicon Valley Bank (SVB) will recover their money “in full” and that the US taxpayers will not pay for the disaster.

“Depositors will have access to all the money starting on Monday, March 13” In the Treasury Department, the Federal Deposit Insurance Corporation and the Federal Reserve said in a joint statement, after several days in which they fought to not knock the effect. of other financial institutions.

A similar systemic risk exception was also announced for Signature Bank which was closed today on Sunday by the regulatory authorities after the SVB case was dropped.

The organization, which faces the liquid crisis, was closed on Friday by the California Department of Protection and Innovation (DFPI).

“Today, we are taking decisive action to protect the U.S. economy by strengthening public confidence in the banking system. This step will ensure that the U.S. banking system continues to perform its vital functions of protecting deposits and providing access to credit for families and businesses in a way that promotes strong and sustainable economic growth,” the official said. said the statement.

Finally, the Federal Reserve Board announced that it would make additional funds available to select depository institutions to help banks have the resources to meet the needs of all their depositors.

“The U.S. banking system remains challenging and solidly grounded, in large part due to the financial crisis reforms that improved protections for the banking industry. Those reforms, combined with today’s actions, demonstrate our commitment to taking the necessary steps to keep depositors safe.

What is BLS?

Silicon Valley Bank (SVB) is a bank specializing in the technology sector of California, which has done business primarily with funds that are invested in unheard of companies. Little known publicly, it was the 16th largest US bank by assets.

The bank had assets of some US$ 209,000 million and deposits for an approximate value of US$ 175,400 million at the end of the 2012 financial year. The intervention of the regulatory authority caused the largest bank failure since the 2008 crisis and thus the sum of funds and operations is one of the largest in the history of the United States.

Observer and AFP

Nation World News Desk
Nation World News Desk
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