U.S. officials stepped in to stem financial fallout from the failure of tech startup-focused Silicon Valley Bank, saying that all customers will have access to their deposits starting on Monday
"I am firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again."
The Biden administration’s intervention underscores how a relentless campaign by the Fed and other major central banks to beat back inflation is putting stress in the financial system and global markets. "What investors have to expect coming into tomorrow and beyond is that we are going to be dealing with a lot of event risk," said Michael Purves, chief executive of Tallbacken Capital Advisors. "There are still going to be lingering questions with other regional banks."The collapse of SVB - the largest bank failure since 2008 - sparked concerns over whether small-business clients would be able to pay their staffs, with the FDIC only protecting deposits of up to $250,000.
"Anytime a bank fails, especially one with billions of dollars in deposits, it is a matter that we take seriously," the official said, pointing to potentially "large implications" for the U.S. economy if companies with deposits in Silicon Valley Bank had been unable to keep paying their workers. Signature, like SVB, had a clientele concentrated in the tech sector, and the securities on its balance sheet had eroded as interest rates rose. As of September, almost a quarter of Signature’s deposits came from the cryptocurrency sector, but the bank announced in December that it would shrink its crypto-related deposits by $8 billion.
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