Jewish hag Yellen changes her tune: SVB, Signature Bank Depositors to Get All Their Money as Fed Moves to Stem Crisis
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Video: When Belgium, White Africans & Blacks fought the Evil Communist Loving UN
This is the strange story of how the Belgians were forced out of their own colony by the globalist United Nations and how America sided with communists. Facing them were Blacks who were supported by the Belgians, South Africans and Rhodesians.
[Apparently on TV she said the opposite. Now she's changing her tune. I suspect that if they said the opposite, that the whole system would implode in a matter of days. Jan]
U.S. regulators took control of a second bank Sunday and raced to roll out emergency measures to stem potential spillovers from Friday’s swift collapse of Silicon Valley Bank, backstopping both firms’ uninsured depositors and making more funding available to the banking system.
Regulators announced Signature Bank, one of the main banks for cryptocurrency companies, was closed Sunday. The New York bank’s depositors will be made whole, officials said.
Officials took the extraordinary step of designating SVB and Signature Bank as a systemic risk to the financial system, which gives regulators flexibility to guarantee uninsured deposits. The Federal Reserve and the Treasury Department also used emergency lending authorities to establish a new facility to help meet demands for withdrawals.
Regulators announced the action in a joint statement from Treasury Secretary Janet Yellen, Fed Chair Jerome Powell and Federal Deposit Insurance Corp. Chair Martin Gruenberg. The group said that depositors at SVB will have access to all of their money on Monday.
Silicon Valley Bank collapsed on Friday, becoming the largest bank to fail since the 2008 financial crisis. On Monday, March 13, at 3:00 p.m. ET, join the Journal’s Wall Street and Financial Industry Bureau Chief Dana Cimilluca and reporter Rolfe Winkler for a conversation about the bank failure, subsequent regulatory action and what this all means for the tech sector and the overall health of the U.S. economy.
The government’s bank-deposit insurance fund will cover all deposits at the two banks, rather than the standard $250,000. Federal regulators said any losses to the government’s fund would be recovered in a special assessment on banks and that the U.S. taxpayers wouldn’t bear any losses.
In a separate statement Sunday night, the Fed said it “is closely monitoring conditions across the financial system and is prepared to use its full range of tools to support households and businesses, and will take additional steps as appropriate.”
The central bank said it would make additional funding available to banks to ensure they have “the ability to meet the needs of all depositors” through a new “Bank Term Funding Program,” which will offer loans of up to one year to banks that pledge U.S. Treasury securities, mortgage-backed securities and other collateral. Up to $25 billion from the Treasury’s exchange-stabilization fund will backstop the Fed lending program.
Many of those securities have fallen in value as the Fed has raised interest rates, and the Fed said those securities would be valued at their original value.
Sunday evening’s announcement capped a frantic weekend during which regulators were auctioning the failed Silicon Valley Bank, according to people familiar with the matter. Regulators struggled to find a buyer on Sunday and pivoted to backstopping the deposits, according to a senior Treasury official, as they sought to announce a resolution to depositors by Monday morning.
Mr. Powell scrapped plans to attend a regular meeting of central bankers in Basel, Switzerland, on Sunday and instead stayed in Washington to manage the crisis response.
A U.S. plan that soothes nerves about access to uninsured deposits—most of the bank’s deposits are sizable enough that they exceeded limits on FDIC protection—could tamp down the crisis and limit any impact on the economy as the Fed has focused on combating inflation by raising interest rates.
At the same time, heavy-handed federal interventions could amount to an embarrassing coda for a rollback of post-financial-crisis regulations on small and midsize banks undertaken in recent years. Officials on Sunday signaled they were weighing tougher capital requirements and liquidity rules, reversing at least some of the steps taken during the Trump administration to ease restrictions on smaller banks.
Federal regulators are trying to balance their desire to prevent broader financial contagion while avoiding the damaging political optics of bailing out financial institutions at taxpayer expense.
Biden administration officials said repeatedly on Sunday that their moves were aimed at protecting depositors, allowing them to make payroll this week, and would come at no cost to taxpayers. A senior Treasury official said the Fed’s lending program would prevent further bank runs.
Nicholas Donahue, the co-founder of real-estate startup Atmos, said he was set to finalize a loan from Khosla Ventures to help make payroll payments for the coming week when he heard the news.
“I’m feeling relieved, the fact that I can go back to my team tonight and say the business will be fine,” Mr. Donahue said. “There’s just a lot of weight off of my shoulders.”
Signature and SVB are the highest-profile casualties of the Fed’s campaign to slow the economy and bring inflation down. The central bank has raised interest rates by 4.5 percentage points over the past year, the most rapid run-up since the early 1980s, and officials have signaled more increases are likely.
New York-based Signature is one of a handful of banks that went big on crypto, providing accounts and other services to crypto startups and big investors in digital assets. It ultimately became one of the crypto market’s leading banks.
That focus and a bespoke payments system for crypto companies helped the bank more than double deposits in two years. In early 2022, some 27% of its deposits were from its digital-asset clients.
The bank’s exposure to crypto became a problem as the year wore on. A market rout that deepened following the November collapse of Sam Bankman-Fried’s crypto exchange, FTX, drained billions of dollars in deposits.
Signature shares fell 23% on Friday, its worst day since it went public in 2004. The bank had $110 billion in assets, and $88.6 billion in deposits as of the end of 2022.
SVB faced its own unique set of challenges. Deposits at the bank surged after the pandemic, and federal policy response left tech companies flush with cash in 2021. The Santa Clara, Calif.-based lender saw total deposits mushroom to nearly $200 billion by March 2022, up from more than $60 billion two years earlier.
Because it invested much of that cash in longer-dated securities whose values have fallen as interest rates have shot up, it risked larger losses if it had to liquidate its securities portfolio. At the same time, its depositors were heavily concentrated in the tightknit world of startups and venture-capital firms, leaving the bank uniquely vulnerable to a run.
A slowdown in tech over the past year, together with rising deposit costs, meant more of its venture-capital-backed customers were burning cash or pulling deposits.
Startups yanked funds more aggressively last week to avoid potential losses on deposits in excess of the $250,000 limit insured by the federal government. Those withdrawals, encouraged by some venture investors, sparked a classic bank run that ended with the FDIC stepping in on Friday.
“All the banks that are close to looking like SVB are either going to reassure their depositors or not. And I’m assuming they’re going to because SVB is really such a special case,” said William Dudley, who was president of the New York Fed from 2009 until 2018. Protecting uninsured depositors “will make that task much easier,” he said.
The speed with which SVB collapsed stunned analysts. The bank was closed on Friday morning; typically, regulators attempt to close failing banks at the end of the week and announce a sale of the banks’ assets at the same time, using the weekend to transfer accounts.
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