U.S. President Joe Biden said Monday that no losses will fall on taxpayers, as the government acts to try to contain a potential crisis from the failure of two major banks.
“The American people and American businesses can have confidence that their bank deposits will be there when they need them,” Biden said in a statement late Sunday. “I am firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again.”
The U.S. Treasury Department said in a statement Sunday that depositors at the California-based Silicon Valley Bank and the New York-based Signature Bank will have access to all of their money on Monday.
The regulators also said no losses associated with the resolution of Silicon Valley Bank and Signature Bank will be borne by the taxpayer.
The statement followed a meeting of officials from top financial regulators, and said the Federal Reserve was also giving other banks access to an emergency lending program to provide additional stability to the wider banking system.
The Federal Deposit Insurance Corporation, which insures deposits and supervises financial institutions, said Monday it transferred all Silicon Valley Bank deposits to a so-called “bridge bank.” The new bank is run by a board appointed by the agency until it is able to stabilize operations.
The Bank of England also announced Monday the sale of Silicon Valley Bank’s UK subsidiary to HSBC in order to stabilize the bank, “ensuring the continuity of banking services, minimizing disruption to the UK technology sector and supporting confidence in the financial system.”
A Bank of England statement said all depositor money was safe and that Silicon Valley Bank UK would continue operating as normal.
The actions were prompted by the failure of Silicon Valley Bank, which regulators seized on Friday after concerns about the bank’s financial health led to a large number of depositors withdrawing their money at the same time.
With about $200 billion in assets, Silicon Valley Bank’s failure was the second-largest in U.S. history. The bank was heavily involved in financing for venture capital firms, especially in the tech sector.
Signature Bank also had a large portion of clients in the tech sector, including cryptocurrency. Its failure, with more than $100 billion in assets, was the third-largest in the country’s history.
Both banks were affected by a rise in interest rates, which negatively affected the market values of significant portions of their assets such as bonds and mortgage-backed securities.
Some information for this story came from The Associated Press, Agence France-Presse and Reuters.