The failure of Silicon Valley Bank and Signature Bank has prompted President Joe Biden to promise that those responsible will be held accountable while ensuring the safety of Americans’ deposits.
On March 12, the New York District of Financial Services took control of Signature Bank. The Federal Reserve said closing the bank was needed to protect the U.S. economy and build trust in the banking system.
The Fed also set up a $25 million fund to help banks with trouble getting cash. Biden took to Twitter on March 13, telling his 29.9 million followers that he is satisfied with the resolution that protects small businesses, workers, taxpayers, and the financial system.
At my direction, @SecYellen and my National Economic Council Director worked with banking regulators to address problems at Silicon Valley Bank and Signature Bank.
I’m pleased they reached a solution that protects workers, small businesses, taxpayers, and our financial system. https://t.co/CxcdvLVP6l
— President Biden (@POTUS) March 13, 2023
The president further affirmed his determination to hold those accountable for the situation fully responsible. He also mentioned that he would have additional remarks on Monday, March 13. In the meantime, many U.S. lawmakers have said they agree with the recent steps taken by federal regulators to stop the current bank failures from spreading.
Senator Sherrod Brown and Representative Maxine Waters also expressed their satisfaction that both insured and uninsured depositors of SVB would be protected, according to a statement from the U.S. Senate Banking and Housing Committee on March 12.
“Today’s actions will enable workers to receive their paychecks and for small businesses to survive, while providing depository institutions with more liquidity options to weather the storm.”
“As we work to better understand all of the factors that contributed to the events of the last several days and how to strengthen guardrails for the largest banks, we urge financial regulators to ensure the banking system remains stable, strong, and resilient, and depositors’ money is safe,” the statement added.
Silicon Valley Bank depositors, both insured & uninsured, will be made whole by the plan from the FDIC, the Federal Reserve, the Treasury & the White House. And the Fed has created a new facility to support all banks that need liquidity to ensure our banking system is safe.
— Maxine Waters (@RepMaxineWaters) March 13, 2023
Gary Gensler, the head of the SEC, said on March 12 that the agency would continue to go after people who break U.S. securities laws. However, he did not mention any specific industries.
“In times of increased volatility and uncertainty, we at the SEC are particularly focused on monitoring for market stability and identifying and prosecuting any form of misconduct that might threaten investors, capital formation, or the markets more broadly.”
“Without speaking to any individual entity or person, we will investigate and bring enforcement actions if we find violations of the federal securities laws,” the SEC chairman added.
The closure of SVB caused Circle’s USD Coin to briefly de-peg on March 11, dropping to as low as $0.88, as a significant amount of the stablecoin’s reserves, $3.3 billion out of $40 billion, were held by SVB. However, the Federal Reserve’s announcement that all customer deposits at Signature Bank and SVB would be fully recovered has helped USDC to recover almost to its $1 peg.
Another notable crypto-friendly bank, Silvergate Bank, had previously announced its voluntary liquidation due to recent regulatory developments in the industry. Before this, SEC Chairman Gensler had written an opinion piece for The Hill on March 9, warning U.S. crypto companies to operate within the legal boundaries or face enforcement actions.
As Chair of @SECGov, I have one goal with regard to the crypto markets: to ensure that investors and the markets receive all the protections that they would in any other securities market. How?
Read my op-ed in @thehill:
— Gary Gensler (@GaryGensler) March 9, 2023