Biden Administration Reassures Americans of Bank Deposit Safety, No Taxpayer Losses
President Joe Biden on Monday sought to reassure Americans that their bank deposits will be safe and available when needed. Following the sudden collapse of Silicon Valley Bank, the Biden administration took quick action to protect depositors and American businesses by guaranteeing customer deposits and creating the Deposit Insurance National Bank of Santa Clara to which all insured deposits of Silicon Valley Bank were transferred.
The 40-year-old bank had roughly $209 billion in total assets and about $174.5 billion in total deposits. Biden said during his remarks that no losses will be borne by taxpayers, and that the money will come from fees that banks pay into the Deposit Insurance Fund.[0]
In an attempt to allay public worries, Shalanda Young, the director of the White House Office of Management and Budget, declared that the US banking system is “more resilient” now.[1] She noted that the US banking system had a better foundation than before the 2008 financial crisis, largely due to the reforms put in place.[1]
Biden also called for a “full accounting” of what led to the shutdown of Silicon Valley Bank and “why those responsible can be held accountable.”[2] Treasury Secretary Janet Yellen on Sunday ruled out a federal bailout for Silicon Valley Bank, telling “Face the Nation” in an interview that “we’re not going to do that again.”[3]
Additionally, Biden said he would ask Congress and regulators to strengthen rules, which he said had been weakened during the Trump administration.[4] Representative Ro Khanna, who represents the congressional district where Silicon Valley Bank was headquartered, said on CBS News’ “Face the Nation” that “the bargain in our country from FDR has always been, investors and shareholders lose. I have no sympathy for the executives, no sympathy for people who have stock there. But the depositors are protected.”[5]
Depositors at Silicon Valley Bank and Signature Bank will have access to all of their money beginning Monday, and no losses associated with the resolution of these banks will be borne by the taxpayer.[6] SVB employees reportedly received their annual bonuses Friday just hours before regulators seized the failing bank, and the bank's CEO, Greg Becker, sold $3.6 million in company shares on Feb. 27, less than two weeks before SVB revealed the massive losses that prompted its collapse.[7]
0. “Biden to address Silicon Valley Bank collapse in speech reassuring markets – live updates” The Guardian US, 13 Mar. 2023, https://www.theguardian.com/us-news/live/2023/mar/13/silicon-valley-bank-collapse-biden-address
1. “Biden vows to hold those responsible for Silicon Valley Bank failure ‘fully accountable'” KTVZ, 13 Mar. 2023, https://ktvz.com/politics/cnn-us-politics/2023/03/12/treasury-secretary-rules-out-bailout-for-silicon-valley-bank-2/
2. “Biden to deliver remarks on Silicon Valley Bank shutdown” NBC News, 13 Mar. 2023, https://www.nbcnews.com/politics/politics-news/biden-deliver-remarks-silicon-valley-bank-shutdown-rcna74622
3. “Rep. Khanna says progressives should be the most concerned amid SVB collapse if Biden admin ‘doesn’t step up'” Fox Business, 12 Mar. 2023, https://www.foxbusiness.com/politics/rep-khanna-says-progressives-most-concerned-amid-svb-collapse-biden-admin-doesnt-step-up
4. “Silicon Valley Bank collapse: Biden speaks Monday on financial sector crisis” NPR, 13 Mar. 2023, https://www.npr.org/2023/03/13/1163046482/watch-live-biden-discusses-the-silicon-valley-banks-meltdown-and-the-u-s-economy
5. “Biden team scrambles to contain financial and political contagion” CNN, 13 Mar. 2023, https://www.cnn.com/2023/03/13/politics/biden-silicon-valley-bank-politics/index.html
6. “Deposits protected as HSBC acquires UK arm of Silicon Valley Bank” The Irish Times, 13 Mar. 2023, https://www.irishtimes.com/business/financial-services/2023/03/12/government-on-alert-as-us-races-to-contain-silicon-valley-bank-collapse-fallout/
7. “Silicon Valley's ‘greed and avarice' have ‘finally come home to roost' in SVB collapse, trader says” CNBC, 13 Mar. 2023, https://www.cnbc.com/2023/03/13/svb-collapse-silicon-valleys-greed-and-avarice-to-blame-trader-says.html
