The FDIC, Treasury Department, and Federal Reserve are working together to ensure depositors’ access to funds.
The Federal Deposit Insurance Corporation has taken over the Silicon Valley Bank after its collapse late last week. Signature Bank of New York suffered the same fate Sunday. A smaller bank known as Silvergate said it would close down its operations not long before. Silvergate had bet everything on the cryptocurrency industry. With the crash of the crypto exchange known as FTX last May, Silvergate found itself with a problem from which it could not recover.
Moody Investors Service said it expects more banks will come under pressure to sustain themselves—particularly ones with large uninsured deposits and long-term Treasury bonds. Moody’s downgraded its rating of the U.S. banking system from “stable” to “negative” on Tuesday.
The FDIC made a record withdrawal of $40 billion Friday in its takeover of Silicon Valley Bank. One analyst said, “The big news was a $40 billion cash withdrawal by the FDIC, which dragged the Treasury’s cash balance far below our day-ahead forecast.” Reports are that the FDIC has only about half the cash that is needed to cover the roughly $265 billion in deposits at the failed banks.
The FDIC, Treasury Department, and Federal Reserve report they are working together to ensure depositors have access to their money. FDIC insures accounts up to $250,000. But they said the exact amount of uninsured deposits needs to be determined.
President Biden assured on Monday that no one will have to pay for the bank’s losses. “The money will come from the fees that banks pay into the deposit insurance,” he said.
The chairmen of the House Financial Services Committee and of the Senate Banking Committee say they are in close contact with regulators seeking “options to weather the storm.”
As the Lord Leads, Pray with Us…
- For FDIC Chair Martin Gruenberg as he works with the Treasury Department and Federal Reserve regarding the failed banks.
- Fo Secretary Yellen to seek God’s guidance as she provides support to the FDIC.
- For Chairman Powell and members of the Federal Reserve as they respond to these bank closures.
Sources: Bloomberg, The Street, Reuters, Just the News, CNN, Townhall
