Governments on both sides of the Atlantic are taking extraordinary steps to stop a potential banking crisis after the failure of Silicon Valley Bank.
SVB Financial Group Chief Executive Greg Becker advised clients of SVB-owned Silicon Valley Bank to “stay calm” amid concern about the bank’s financial position.
In an effort to shore up confidence in the banking system, the U.S. Treasury Department, Federal Reserve and the Federal Deposit Insurance Corp. said Sunday that“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 agencies said in a joint statement.
Under the plan, depositors at Silicon Valley Bank and Signature Bank, including those whose holdings exceed the $250,000 insurance limit, will be able to access their money Monday. “When you have very young companies, very promising companies, they’re also fragile,” Hunt told reporters, explaining why authorities moved so quickly. “They need to pay their staff, and they were worried that as of 8 a.m. this morning, they might literally not be able to access their bank account.”In the U.S.
The Treasury has set aside $25 billion to offset any losses incurred under the Fed’s emergency-lending facility. Fed officials said, however, that they do not expect to have to use any of that money, given that the securities posted as collateral have a very low risk of default.
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