US President Joe Biden addressed the nation pledging to safeguard the country’s banking system as global bank stocks plunged amid the Silicon Valley Bank and Signature Bank collapse.
“Americans can rest assured that our banking system is safe. Your deposits are safe,” Biden said from the Roosevelt Room. “Let me also assure you we will not stop at this. We will do whatever is needed on top of all this.”
While he assured the customers of the Silicon Valley Bank that their money was safe — insured by the Federal Deposit Insurance Corporation (FDIC) — he pulled his support for investors in the failed banks’ securities.
“Investors in the banks will not be protected,” Biden said in the White House speech. “They knowingly took a risk and when the risk didn’t pay off, the investors lose their money. That’s how capitalism works.”
Just like SVB, the Signature Bank also closed doors on March 12, 2023, over similar systemic contagion fears.
“The FDIC on Friday took control of SVB’s assets and over the weekend Signature’s,” Biden said. “All customers who had deposits in these banks can rest assured they will be protected and they’ll have access to the money as of today.” Biden said that The FDIC’s Deposit Insurance Fund will be used to cover depositors amid the fallout.
“No losses will be borne by the taxpayers,” Biden stressed. “I’m going to repeat that – no losses will be borne by the taxpayers. Instead, the money will come from the fees that banks pay into the Deposit Insurance Fund.”
The collapse of SVB sent shock waves across the tech and banking industries as it was a favourite bank for startups. After the 2008 depression, this was the second-largest bank collapse in the country’s history.
As a major setback, Y Combinator filed a petition to the US government saying that around 10,000 small businesses that had deposits in SVB will not be able to make payroll in the next 30 days. More than 100,000 jobs are expected to be impacted due to the fallout.