GOVERNMENT MOVES TO STOP POTENTIAL BANKING CRISIS
NEW YORK — The U.S. government took extraordinary steps Sunday to stop a potential banking crisis after the historic failure of Silicon Valley Bank, assuring all depositors at the failed institution that they could access all their money quickly, even as another major bank was shut down.
The announcement came amid fears that the factors that caused the Santa Clara, California-based bank to fail could spread. Regulators had worked all weekend to try to find a buyer for the bank, which was the secondlargest bank failure in history. Those efforts appeared to have failed Sunday.
In a sign of how fast the financial bleeding was occurring, regulators announced that New York-based Signature Bank had also failed and was being seized on Sunday. At more than $110 billion in assets, Signature Bank is the thirdlargest bank failure in U.S. history.
The near-financial crisis that U.S. regulators had to intervene to prevent left Asian markets jittery as trading began Monday.
In an effort to shore up confidence in the banking system, the Treasury Department, Federal Reserve and FDIC said Sunday that all Silicon Valley Bank clients would be protected and able to access their money. They also announced steps that are intended to protect the bank’s customers and prevent additional bank runs.
“This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth,” the agencies said in a joint statement.
Under the plan, depositors at Silicon Valley Bank and Signature Bank, including those whose holdings exceed the $250,000 insurance limit, will be able to access their money on Monday.
In a separate move, the Federal Reserve late Sunday announced an expansive emergency lending program that’s intended to prevent a wave of bank runs that would threaten the stability of the banking system and the economy as a whole.
Fed officials characterized the program as akin to what central banks have done for many decades: Lend freely to the banking system so that customers would be confident that they could access their accounts whenever needed.