President Joe Biden said Monday that customers who had deposits at Silicon Valley Bank and Signature Bank can “rest assured they'll be protected and they'll have access to their money as of today,” following the banks’ collapses last week.
SVB and Signature are the second- and third-largest bank failures in U.S. history following the 2008 failure of Washington Mutual. SVB and Signature had $209 billion and $118 billion, respectively.
None of the financial burden of protecting SVB and Signature depositors will fall on taxpayers because the money will come from the Federal Deposit Insurance Corp.’s deposit insurance fund, Biden said.
Investors, however, will not be so lucky.
“They knowingly took a risk. And when the risk didn't pay off, investors lose their money. That's how capitalism works,” he said.
Additionally, bank management will be fired — “if the bank is taken over by FDIC, the people running the bank should not work there anymore,” Biden said — and regulators will seek “the full accounting of what happened and why those responsible can be held accountable.”
”In my administration, no one is above the law,” he said.
Biden said he plans to ask Congress and banking regulators to strengthen rules for banks to make it “less likely this kind of bank failure would happen again, and to protect American jobs and small businesses.”
“Americans can rest assured that our banking system is safe. Your deposits are safe. Let me also assure you we will not stop at this — we’ll do whatever is needed,” he said.
The president’s remarks follow the FDIC’s seizure of control of both SVB’s and Signature’s assets over the weekend.
Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell, and FDIC Chair Martin Gruenberg released a joint statement Sunday assuring that depositors at both banks would be safe. Additionally, any losses to the Deposit Insurance Fund to support uninsured depositors “will be recovered by a special assessment on banks, as required by law,” and the Federal Reserve Board will make available additional funding to help banks meet the needs of their depositors.
“The U.S. banking system remains resilient and on a solid foundation, in large part due to reforms that were made after the financial crisis that ensured better safeguards for the banking industry,” the regulators said. “Those reforms combined with today's actions demonstrate our commitment to take the necessary steps to ensure that depositors' savings remain safe.”
