SVB, Signature Bank depositors to get all their money as Fed moves to stem crisis

US regulators took control of a second bank Sunday and raced to roll out emergency measures to stem potential spillovers from Friday’s swift collapse of Silicon Valley Bank.

Silicon Valley Bank boss Greg Becker sold $US5.3m in shares two weeks before collapse.

US regulators took control of a second bank Sunday and raced to roll out emergency measures to stem potential spillovers from Friday’s swift collapse of Silicon Valley Bank, backstopping both firms’ uninsured depositors and making more funding available to the banking system.

Regulators announced Signature Bank, one of the main banks for cryptocurrency companies, was closed Sunday. The New York bank’s depositors will be made whole, officials said.

Officials took the extraordinary step of designating SVB and Signature Bank as a systemic risk to the financial system, which gives regulators flexibility to backstop uninsured deposits. The Federal Reserve and the Treasury Department also used emergency lending authorities to establish a new facility to help meet withdrawals.

Regulators announced action in a joint statement from Treasury Secretary Janet Yellen, Fed chair Jerome Powell and Federal Deposit Insurance chair Martin Gruenberg. The group said that depositors at SVB would have access to all of their money on Monday.

The government’s bank-deposit insurance fund will cover all deposits at the two banks, rather than the standard $US250,000 ($376,441). Federal regulators said that any losses to the government’s fund would be recovered in a special assessment on banks and that the U.S. taxpayers wouldn’t bear any losses.

In a separate statement Sunday night, the Fed said it “is closely monitoring conditions across the financial system and is prepared to use its full range of tools to support households and businesses, and will take additional steps as appropriate.”

The central bank said it would make additional funding available to banks to ensure they have “the ability to meet the needs of all depositors” through a new “Bank Term Funding Program,” which will offer loans of up to one year to banks that pledge US Treasury securities, mortgage-backed securities and other collateral.

The Wall Street Journal