US govt says SVB customers can access their money as second bank fails

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The US government has said that the depositors of the embattled Silicon Valley Bank (SVB) will be able to access all their cash from Monday (March 13) as it announced a series of emergency measures to restore people’s confidence in the American banking system.

The announcement came on Sunday when another bank, Signature Bank, which was on the brink of collapse in recent days, shut down. Signature’s customers will receive a similar deal, ensuring that even uninsured deposits will be returned to them Monday.

Signature Bank is a New York-based regional-size lender with significant cryptocurrency exposure which was shuttered on Sunday after its stock price tanked.

In a joint statement on Sunday, Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell and Federal Deposit Insurance Corporation Chairman Martin J Gruenberg said that the Federal Deposit Insurance Corporation will make SVB and Signature’s customers “whole”.

Venture capitalists quick to abandon ship on SVB

With this move, the government has guaranteed to keep all deposits– even the uninsured money that customers kept with the failed banks – safe. It aims to prevent more bank runs and to help companies that deposited large sums with the banks to continue to make payroll and fund their operations, reports CNN.

The FDIC guarantees deposits, but only up to $250,000 per client and per bank.

Moreover, the Fed announced it would make extra funding available to banks to help them meet the needs of depositors, which would include withdrawals.

“We are taking decisive actions to protect the US economy by strengthening public confidence in our banking system,” the agencies said in their joint statement.

“The US banking system remains resilient and on a solid foundation… Those reforms combined with today’s actions demonstrate our commitment to take the necessary steps to ensure that depositors’ savings remain safe.”

(With inputs from agencies)

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