Silicon Valley Bank collapse: ‘The banking system is safe,’ Biden says

The fallout from the collapse of Silicon Valley Bank continues to ripple across the globe after the second-largest banking failure in history and the largest since the 2008 financial meltdown.

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California regulators shut down the bank on Friday to help calm the fears of investors and customers, some of whom were unable to withdraw their funds, CNN reported. On Sunday, regulators took control of a second financial institution, Signature Bank.

Federal Reserve Board to review supervision of Silicon Valley Bank

Update 4:20 p.m. EDT March 13: The Federal Reserve Board announced its vice chair for supervision, Michael S. Barr, will be heading a review of its supervision of Silicon Valley Bank, according to The New York Times.

The review is expected to be released to the public on May 1, the newspaper reported.

“The events surrounding Silicon Valley Bank demand a thorough, transparent, and swift review by the Federal Reserve,” said Chair Jerome H. Powell in a news release from the Federal Reserve Board.

“We need to have humility, and conduct a careful and thorough review of how we supervised and regulated this firm, and what we should learn from this experience,” said Vice Chair Barr in the news release.

— Jessica Goodman, Cox Media Group National Content Desk

White House rejects calling federal intervention ‘bailout’ of Silicon Valley Bank

Update 3:55 p.m. EDT March 13: Federal officials on Monday said that action taken in response to the failure of Silicon Valley Bank is not a “bailout,” The Washington Post reported.

Speaking to remembers on Air Force One, White House press secretary Karine Jean-Pierre said, ”This is not 2008 at all. This is not going to be on the taxpayers.”

Earlier, President Joe Biden said, “No losses will be borne by taxpayers. Instead, the money will come from fees that banks pay into the deposit insurance fund.”

— Theresa Seiger, Cox Media Group National Content Desk

Some start regaining access to SVB accounts

Update 3:15 p.m. EDT March 13: Some of Silicon Valley Bank’s customers began to regain access to their accounts on Monday, although some reported hiccups, according to Bloomberg News.

Spencer Rascoff, an entrepreneur and co-founder of Zillow, said in a tweet that he was able to transfer funds from a business account with Silicon Valley Bank about three hours after initiating the transfer.

Venture capitalist Mamoon Hamid said that on Monday morning, “some companies (have) been able to get funds out. But the site keeps crashing,” according to Bloomberg News.

— Theresa Seiger, Cox Media Group National Content Desk

What is the FDIC?

Update 2:45 p.m. EDT March 13: Over the weekend the Federal Deposit Insurance Corporation, or FDIC, told people who deposited funds into Silicon Valley Bank that they would receive up to $250,000, if their accounts were eligible. Officials added that uninsured depositors “will receive a receivership certificate for the remaining amount of their uninsured funds.”

The FDIC was created following the Great Depression. It is tasked with insuring checking and savings accounts, certificates of deposit and money market deposit accounts.

— Theresa Seiger, Cox Media Group National Content Desk

Regional banks assure customers amid volatility prompted by bank collapses

Update 1:55 p.m. EDT March 13: Several banks issued statements to assure customers and clients amid market volatility spurred by the collapse in recent days of Silicon Valley Bank and Signature Bank.

Officials with Phoenix regional bank Western Alliance said that withdrawals had been “moderate” as the company’s stock went into free-fall on Monday, according to CNBC. In a statement obtained by the news outlet, the bank’s CEO and president, Kenneth Vecchione, said that Wester Alliance “has taken additional steps to strengthen its liquidity position to ensure that we are in a position to meet all of our client funding needs, including increasing our borrowing capacity.”

PacWest Bancorp, a regional bank in Los Angeles, said it had access to about $14 billion in liquidity, according to The New York Times.

“Though the banking industry is experiencing significant volatility in light of recent events, we want to reiterate that Pacific Western Bank is a well-performing, well-diversified, full-service commercial bank,” the bank’s CEO, Paul Taylor, said in a statement obtained by the Times.

— Theresa Seiger, Cox Media Group National Content Desk

Senate Republicans being briefed by Treasury

Update 12:55 p.m. EDT March 13: Senate Republicans were receiving a briefing on Monday afternoon from the Treasury Department on the collapse of Silicon Valley Bank, CNN reported.

A spokesperson for Senate Banking Committee member Sen. Tim Scott, R-S.C., confirmed the meeting to CNN. It comes after Treasury officials held a briefing Sunday night that did not include invitations for several Republicans on the committee, the news station reported. Some lawmakers were able to join the meeting Sunday after noting the issue, according to CNN.

— Theresa Seiger, Cox Media Group National Content Desk

SEC monitoring for possible misconduct after banks collapse

Update 11:50 a.m. EDT March 13: Officials with the Securities and Exchange Commission said Sunday that they are watching for any potential misconduct following the collapse in recent days of Silicon Valley Bank and Signature Bank.

“In times of increased volatility and uncertainty, we at the SEC are particularly focused on monitoring for market stability and identifying and prosecuting any form of misconduct that might threaten investors, capital formation, or the markets more broadly,” SEC Chair Gary Gensler said in a statement.

“Without speaking to any individual entity or person, we will investigate and bring enforcement actions if we find violations of the federal security laws.”

— Theresa Seiger, Cox Media Group National Content Desk

LendingClub, Roblox among companies impacted by Silicon Valley Bank failure

Update 11:10 a.m. EDT March 13: Several businesses — including financial services company LendingClub, online gaming platform Roblox, online marketplace Etsy and streaming device company Roku — had millions of dollars deposited with Silicon Valley Bank before the bank collapsed on Friday.

— Theresa Seiger, Cox Media Group National Content Desk

Stocks slump as markets open for trading

Update 10 a.m. EDT March 13: Stocks and Treasury yields were falling sharply Monday morning after markets opened following the collapse of Silicon Valley Bank and Signature Bank, The Associated Press reported.

The S&P 500 was 1% lower early Monday, according to the AP. Shares of First Republic Bank fell a record 67% at the open amid fears that other regional banks could collapse, Bloomberg News reported. Western Alliance fell 75%, while East West Bancorp was down 23%, Regions Financial was down 22% and Charles Schwab was down 20%, according to The New York Times.

— Theresa Seiger, Cox Media Group National Content Desk

Biden says he will push for stronger banking regulations

Update 9:30 a.m. EDT March 13: President Joe Biden said he will focus on strengthening bank regulations while delivering remarks from the White House on Monday following the collapse of Silicon Valley Bank and Signature Bank.

“I’m going to ask Congress and the banking regulators to strengthen the rules for banks to make it less likely this kind of bank failure would happen again, and to protect American jobs and small businesses,” Biden said. He did not provide specifics.

The president earlier said that questions lingered about the circumstances that led the banks to fail on Friday and Saturday.

“There are important questions about how these banks got into these circumstances in the first place. We must get the full accounting of what happened and why those responsible can be held accountable,” he said. “No one is above the law.”

— Theresa Seiger, Cox Media Group National Content Desk

Biden: Banks will not be bailed out by taxpayers

Update 9:25 a.m. EDT March 13: President Joe Biden said Monday that taxpayers will not foot the bill for bailing out Silicon Valley Bank or Signature Bank. Instead, he said the needed funds will come from fees that banks pay into the deposit insurance fund.

Money for the fund comes from insurance premiums paid by institutions insured by the Federal Deposit Insurance Corporation, or FDIC, and interest earned on money invested in “U.S. government obligations,” according to officials.

Biden said that protections for bank customers will not extend to the institutions’ investors.

“They knowingly took a risk and when the risk didn’t pay off, investors lose their money,” the president said. “That’s how capitalism works.”

— Theresa Seiger, Cox Media Group National Content Desk

Customers of failed banks will be protected, Biden says

Update 9:10 a.m. EDT March 13: Speaking Monday at the White House, President Joe Biden reiterated that “Americans can have confidence that the banking system is safe” following the second- and third-largest bank failures in U.S. history.

“Your deposits will be there when you need them,” the president said. “Small businesses across the country that deposit accounts at these banks can breathe easier knowing they’ll be able to pay their workers and pay their bills, and their hard-working employees can breathe easier as well.”

He said customers of Silicon Valley Bank and Signature Bank “can rest assured they’ll be protected, and they’ll have access to their money as of today.”

“No losses will be borne by the taxpayers,” he said. “Instead, the money will come from the fees that banks pay into the deposit insurance fund.”

— Theresa Seiger, Cox Media Group National Content Desk

Sen. Elizabeth Warren: Bank failures caused by federal leaders

Update 8:55 a.m. EDT March 13: Sen. Elizabeth Warren, D-Mass., said in an opinion piece published Monday by The New York Times that the recently announced bank failures “are the direct result of leaders in Washington weakening the financial rules” in 2018.

“Had Congress and the Federal Reserve not rolled back the stricter oversight, S.V.B. and Signature would have been subject to stronger liquidity and capital requirements to withstand financial shocks,” she wrote.

“They would have been required to conduct regular stress tests to expose their vulnerabilities and shore up their businesses. But because those requirements were repealed, when an old-fashioned bank run hit S.V.B‌., the‌ bank couldn’t withstand the pressure — and Signature’s collapse was close behind.”

— Theresa Seiger, Cox Media Group National Content Desk

Signature Bank closure 3rd-largest bank failure in US history

Update 8:30 a.m. EDT March 13: The closure Sunday of Signature Bank, whose customers include some of the nation’s largest law firms, marked the third-largest bank failure in history days after the collapse of Silicon Valley Bank become the second-largest bank failure in history.

On Sunday, regulators began emergency measures aimed at bolstering confidence in the U.S. banking system.

— Theresa Seiger, Cox Media Group National Content Desk

Biden to speak about banking system

Update 8:08 a.m. EDT March 13: President Joe Biden will speak at 9 a.m. from the White House about the U.S. banking system, Bloomberg reported.

Original report: Silicon Valley Bank was one of the top 20 largest commercial banks and, as of Friday, was under the control of the U.S. Federal Deposit Insurance Corporation (FDIC). It served almost half of the venture capital-backed technology and life-science companies in the U.S., according to The New York Times.

The FDIC is considered a receiver and has been trying to find a buyer for Silicon Valley Bank so the government can turn around and pay back the bank’s depositors and creditors. The FDIC held an auction over the weekend, but eventually decided to pay back depositors without finding a buyer because it would be difficult to go over the bank’s ledgers by Monday morning, The New York Times reported.

The FDIC said that all insured depositors would have access to their money by Monday morning, and uninsured depositors would get an “advance dividend within the next week,” CNN reported. According to Silicon Valley Bank’s latest annual report, customers based in the U.S. had at least $151.5 billion in uninsured deposits at the end of 2022 while there were at least $13.9 billion in foreign, uninsured deposits.

Meanwhile, HSBC announced it will be buying a British subsidiary of Silicon Valley Bank, with the bank operating as normal under the new owner as regulators there said that all deposits at the bank are “safe and secure as a result of this transaction,” the Times reported.

A second bank, Signature Bank, which is based in New York and deals with real estate, shut down on Sunday. The Times reported that if the bank would have continued operating, it could have brought down the country’s financial system.

Silvergate, which focuses on cryptocurrency, is also starting the process of shutting down and is planning to liquidate the bank, CNN reported.

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