The Treasury under Secretary Janet Yellen said Sunday that no losses by Silicon Valley Bank or Signature Bank will be borne by depositors. File Photo by Al Drago/UPI |
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March 12 (UPI) -- Regulators shut down New York's Signature Bank on Sunday, the second bank to be shuttered in a matter of days, with President Joe Biden attempting to assuage fears over the stability of the financial system by vowing to continue efforts to strengthen oversight and regulation.
Signature Bank -- a state-charted, federal-insured crypto industry lender based in New York City -- was closed by state bank regulators Sunday in an effort "to protect depositors," New York Department of Financial Services Superintendent Adrienne Harris said in a statement.
According to state records, Signature Bank has $110.3 billion in total assets and some $88.6 billion in total deposits as of Dec. 31.
The bank's closure comes after California's Silicon Valley Bank, a tech startup lender, became the first major bank to fail in more than two years by being forced to close its doors by state regulators on Friday, and after Silvergate Bank, another major California-based crypto bank, said that it would "wind down operations" and begin the process of voluntary liquidation on Wednesday.
While Silvergate said its plan includes full repayment for all depositors, the dissolution of Silicon Valley Bank raised concerns over the weekend about who would bear the financial loss, with the federal government on Sunday stating all depositors will have access to their money from Monday.
"No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer," the U.S. Treasury in a joint statement with the Federal Reserve and the Federal Deposit Insurance Corporation.
All depositors of Signature Bank will also "be made whole," they vowed. "As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer."
"Shareholders and certain unsecured debtholders will be protected," the agencies said, adding that senior management at Signature Bank has been removed.
As required by law, any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks.
In an attempt to calm worries concerning the entire financial system, the federal agencies were adamant that it "remains resilient and on a solid foundation" due to reforms put in place following the 2008 financial crisis.
The Fed on Sunday also announced the creation of an emergency lending program to ensure banks have funding available to "meet the needs of all their depositors."
Biden, who directed Silicon Valley Bank and Signature Bank be closed, said their shuttering ensures that taxpayer dollars will not be put at risk. He also vowed to hold to account "those responsible for this mess."
"The American people and American businesses can have confidence that their bank deposits will be there when they need them," he said in a statement.
The president said he will deliver remarks Monday on "how we will maintain a resilient banking system to protect our historic economic recovery."
