President Joe Biden said anyone with deposits at Silicon Valley Bank and Signature Bank would have access to their money today.
He emphasized that taxpayers will not pay for the money regulators provide to Silicon Valley Bank (SVB) and Signature Bank depositors, including small businesses that need to run payroll.
Joe Biden Calls For Stronger Banking Regulations During The Trump Era
Instead, the funds will come from bank contributions to the Federal Deposit Insurance Corporation in accordance with US banking law. The government will not protect investors and banks with SVB and signature relationships.
The FDIC transferred Signature’s funds to a subsidiary, Signature Bridge Bank NA, and will make payments to insured and uninsured customers under the “systemic risk exception” rule. According to Bloomberg, about 90% of the deposits of the two banks were not insured.
The FDIC will also fire management staff at the two institutions and investigate the incidents that led to their closure.
To reduce the risk of a repeat, Biden said he would ask the government to strengthen banking regulations in line with the Dodd-Frank law introduced by the Obama administration, which was partially relaxed by the Trump administration in 2018 .
“I’m going to ask Congress and banking regulators to strengthen rules for banks to prevent this kind of bank failure from happening again, and to protect American jobs and small businesses,” Biden said.
Asked whether the failure of Silicon Valley Bank and Signature could have an impact on the US economy, the president was unwilling to comment.
After the speech, the S&P 500 fell 1.1%, while shares of Western Alliance Bancorp plunged 75% in premarket trading. Television host Jim Cramer touted shares last Friday during his Mad Money show on MSNBC. Other stocks such as JPMorgan and First Republic have also suffered a drop in share prices, with the latter halting trading.
The FDIC placed Silicon Valley Bank and Signature Bank under receivership on March 10, 2023 and March 12, 2023. The Federal Reserve created a new $25 billion “Bank Term Funding Program” to ease terms and extend one-year loans to banks. Bank to use its discount window.
Coinroots CEO Says SVB Collapse is Bullish for Bitcoin
Dave Weisberger of Coinroots told Bloomberg Technology last Friday that the long-term impact of SVB and Signature will be bullish for bitcoin. He explains that bitcoin was designed to completely bypass the counterparty risk involved in the fractional reserve banking system under which US banks operate.
However, a short-term increase over the past 24 hours could indicate trader sentiment that the Federal Reserve will return to a 25 basis point hike at its next meeting.
At press time, bitcoin was up about 16.7% from $20,585 to $24,334 on the day. ETH is up over 14% from $1473 to around $1,650, while Cardano is up 15% to $0.349049.
Last week, the CME’s FedWatch tool raised the prospect of a 50 basis point increase in US job numbers in February 2023 after higher wage growth and more people in jobs appear. The Fed will use upcoming consumer price index and personal consumption expenditure economic data to announce further rate hikes at its March 21-22, 2023 Open Market Committee meeting.
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