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 funds regulators will make available to Silicon Valley Bank (SVB) and Signature Bank depositors, which includes small businesses that need to run payrolls.
Joe Biden Calls for Stronger Banking Rules Relaxed During Trump Era
Instead, the funds will come from bank contributions to the Federal Deposit Insurance Corporation as per U.S. banking law. The government will not protect investors and banks with SVB and Signature relationships.
The FDIC has transferred Signature’s funds to a subsidiary, Signature Bridge Bank NA, and will pay insured and non-insured customers under the “systemic risk exception” rule. According to Bloomberg, roughly 90% of both banks’ deposits were uninsured.
The FDIC will also fire management staff at the two institutions and investigate the events that ended in their shutdown.
To reduce the risk of a recurrence, Biden said he would ask the government to strengthen banking rules in line with the Dodd-Frank law introduced by the Obama administration, which the Trump administration partially relaxed in 2018.
“I’m going to ask Congress and banking regulators to strengthen the rules for banks to make less likely this kind of bank failure would happen again, and to protect American jobs and small businesses,” Biden said.
When pressed on whether the failure of Silicon Valley Bank and Signature could have ripple effects on the American economy, the president wasn’t willing to comment.
After the speech, the S&P 500 fell 1.1%, while the shares of Western Alliance Bancorp fell 75% in premarket trading. Television host Jim Cramer punted the shares during his Mad Money show on MSNBC last Friday. Other stocks like JPMorgan and First Republic have also suffered share price drops, 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 has created a new $25 billion “Bank Term Funding Program” to offer one-year loans to banks and eased terms for banks to use its discount window.
SVB Collapse is Bullish for Bitcoin, Says Coinroutes CEO
Dave Weisberger of Coinroutes told Bloomberg Technology last Friday that the long-term effect of SVB and Signature will be bullish for Bitcoin. He points out that Bitcoin was designed to completely bypass the counterparty risk involved in the fractional reserve banking system that U.S. banks operate under.
However, short-term rises in the last 24 hours could signify trader sentiment that the Federal Reserve will revert to a 25 basis point hike at its next meeting.
At press time, Bitcoin had risen about 16.7% from $20,585 to $24,334 on the day. ETH is up over 14% from $1473 to about $1,650, while Cardano is up 15% to $0.349049.
Last week, CME’s Fedwatch tool pushed up the probability of a 50 basis point increase after hot U.S. job numbers revealed higher wage growth and more people in jobs in Feb. 2023. The Fed will use upcoming Consumer Price Index and Personal Consumption Expenditure economic data to inform further the rate hike it will choose at its March 21-22, 2023, Open Markets Committee meeting.
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BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.