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Washington, March 13 () In an incredible move to restore confidence in the US banking system, President Joe Biden’s administration guaranteed that failed Silicon Valley Bank (SVB) customers will have access to all their money starting Monday.
In a related action, the government closed Signature Bank, a regional bank that was on the brink of collapse in recent days, CNN reported.
Signature customers will receive a similar deal, ensuring that even uninsured deposits will be returned to them on Monday.
In a joint statement, Treasury Secretary Janet Yellen, Federal Reserve Chairman Jerome Powell and Federal Deposit Insurance Corporation Chairman Martin J. Gruenberg said the FDIC will make SVB and Signature customers whole.
By guaranteeing all deposits, even the uninsured money that customers kept with the failed banks, the government aimed to prevent more bank runs and help companies that deposited large sums with the banks to continue doing the payroll and funding their operations, CNN reported.
The Fed will also make additional funding available to eligible financial institutions to prevent similar bank runs in the future.
“Monday will certainly be a stressful day for many in the regional banking sector, but today’s action dramatically reduces the risk of further contagion,” Jefferies analysts Thomas Simons and Aneta Markowska said in a note to clients on Sunday evening .
Wall Street investors were glad that the government had intervened.
Dow futures were up nearly 300 points, or 0.9 percent late Sunday. S&P 500 and Nasdaq futures were both up 1.3 percent. Markets fell more than 3 percent on Thursday and Friday as investors feared more bank failures and systemic risk to the technology sector, CNN reported.
“The US banking system remains resilient and on solid footing, largely due to reforms made after the (2008) financial crisis that ensured better protections for the banking industry,” the regulators said.
“Those reforms together with today’s actions demonstrate our commitment to taking the necessary steps to ensure that depositors’ savings remain safe.”
(This story has not been edited by The Kashmir Monitor Staff and is auto-generated from a syndicated feed)