The US government took extraordinary measures on Sunday in an attempt to prevent more instability amongst banks after the historic collapse of Silicon Valley Bank and guaranteed customers of the failed financial institution that they’d find a way to get all their a refund quickly.
The announcement got here amid concerns that the aspects that caused the Santa Clara, California-based bank could spread and just hours before Asia began trading.
Regulators worked all weekend trying to discover a buyer for the bank or broker, one other intervention, and when one other bank, Signature Bank, shut down.
The Treasury Department, the Federal Reserve and the FDIC said Sunday that each one Silicon Valley Bank customers will be protected and have access to their funds, and announced steps to protect the bank’s customers and stop more bank runs.
“This step will be sure that the US banking system continues to fulfill its vital role of protecting deposits and providing access to credit for households and businesses in a way that promotes strong and sustainable economic growth,” the agencies said in a joint statement.
Regulators had to rush to shut down Silicon Valley Bank, a financial institution with greater than $200 billion in assets, on Friday as the traditional bank run saw depositors rush to withdraw all their funds without delay. It’s the second-largest bank failure in U.S. history, surpassed only by Washington Mutual’s 2008 bankruptcy.
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Some outstanding Silicon Valley executives feared that if Washington didn’t save the failing bank, customers made rounds on other financial institutions in the coming days. Share prices have fallen over the past few days at other banks serving tech firms, including First Republic Bank and PacWest Bank.
The bank’s clients include a variety of California wine firms, where many vineyards profit from Silicon Valley Bank loans, and tech startups fighting climate change.
Sunrun, which sells and leases solar energy systems, had lower than $80 million in money deposits at Silicon Valley Bank as of Friday and expects more information on the expected recovery in the coming week, the company said in an announcement.
Stitchfix, a well-liked apparel retail site, revealed in a recent quarterly report that it has a line of credit of up to $100 million with Silicon Valley Bank and other lenders.