WASHINGTON — Plans to fully refund deposits made at the collapsed Silicon Valley Bank and closed signature banks were announced Sunday, making Wall Street and big financial institutions bear the bills rather than taxpayers, a finance official said. said.
“For banks placed in trusteeship, the FDIC will use funds from the Deposit Insurance Fund to ensure that all depositors are complete,” a senior Treasury official told reporters on Sunday about the conditional plan. told to Anonymous.
“The risk is borne by the deposit insurance fund,” he stressed. “This is not money from taxpayers.”
of deposit insurance fund It is part of the FDIC and is funded by quarterly fees charged to FDIC-insured financial institutions and interest on funds invested in government bonds.
The DIF now has more than $100 billion in funding, which Treasury officials say is “more than enough” to cover SVB and signatory depositors.
The Biden administration is deeply aware of the public outrage caused by the major taxpayer-funded Wall Street bank bailout during the 2008 financial crisis, and is using the DIF to bolster depositors. Doing so is seen as a way to avoid repeating the same process.
To that end, federal officials strongly objected to the idea that the SVB and signature scheme constitute a “relief.”
“Bank stock and bond holders are being wiped out,” said a Treasury official. “They took risks as owners of securities. They would lose money.”
“Corporates are not bailed out… Depositors are protected.”
Already Sunday night there were early signs that Biden’s plans to use the DIF to help SVB and Signature depositors meet the demands of at least one critic of the 2008 bailout. I was.
Senator Bernie Sanders claimed “Any Silicon Valley Bank bailout would have to be 100% funded by Wall Street and the big financial institutions.”
Sanders blamed the collapse of the SVB on the success of Republican efforts to ease banking regulations signed into law by former President Donald Trump in 2018.
On Sunday, California Democratic Rep. Katie Porter said she was drafting legislation to overturn the 2018 bill.
On Sunday afternoon, the Treasury Department approved plans to dissolve both the SVB and the New York-based signatory bank “in a manner that fully protects all depositors.”
The dramatic move comes days after SVB, a major funding hub for tech companies, reported that it was struggling, sparking a drawdown of bank deposits. The signature was closed by the government on Sunday.
SVB’s failure was the nation’s largest financial institution failure since Washington Mutual’s failure in 2008.
