The president of the United States, Joe Biden, has vowed to hold those responsible for the failure of Silicon Valley Bank and Signature Bank while assuring Americans that their deposits are safe.
On March 12, the New York District of Financial Services took possession of Signature Bank. The Federal Reserve said that the crypto-friendly bank was closed to protect the U.S. economy and strengthen public confidence in the banking system.
The Fed also announced a $25 million fund aimed at backstopping certain banks that could face liquidity issues in the future.
Biden tweeted to his 29.9 million followers on March 13 that he’s pleased that the agencies have “reached a solution that protects workers, small businesses, taxpayers and our financial system.”
At my direction, @SecYellen and my National Economic Council Director worked with banking regulators to address problems at Silicon Valley Bank and Signature Bank.
I’m pleased they reached a solution that protects workers, small businesses, taxpayers, and our financial system. https://t.co/CxcdvLVP6l
— President Biden (@POTUS) March 13, 2023
The president added he was also “firmly committed” to holding those responsible for the mess “fully accountable.” He added that he would “have more to say” in an address on Monday, March 13.
Meanwhile, a host of other United States politicians have also shared praise over the recent federal regulator actions aimed at stemming contagion from the recent banking collapses.
U.S. Senator Sherrod Brown and Representative Maxine Waters said they were also pleased to see that both insured and uninsured SVB depositors would be covered, according to March 12 statement by the U.S. Senate Banking and Housing Committee:
“Today’s actions will enable workers to receive their paychecks and for small businesses to survive, while providing depository institutions with more liquidity options to weather the storm.”
“As we work to better understand all of the factors that contributed to the events of the last several days and how to strengthen guardrails for the largest banks, we urge financial regulators to ensure the banking system remains stable, strong, and resilient, and depositors’ money is safe,” the statement added.
Silicon Valley Bank depositors, both insured & uninsured, will be made whole by the plan from the FDIC, the Federal Reserve, the Treasury & the White House. And the Fed has created a new facility to support all banks that need liquidity to ensure our banking system is safe.
— Maxine Waters (@RepMaxineWaters) March 13, 2023
Meanwhile, U.S. Securities Exchange Commission Chairman Gary Gensler has used the moment to double down on his agency’s pursuit of wrongdoers, without naming any industries in particular.
The chairman reinforced that the SEC would be on the lookout for violators of U.S. securities laws in a March 12 statement:
“In times of increased volatility and uncertainty, we at the SEC are particularly focused on monitoring for market stability and identifying and prosecuting any form of misconduct that might threaten investors, capital formation, or the markets more broadly.”
“Without speaking to any individual entity or person, we will investigate and bring enforcement actions if we find violations of the federal securities laws,” the SEC chairman added.
The shuttering of SVB temporarily triggered the depegging of Circle’s USD Coin (USDC) to as low as $0.88 on March 11, as $3.3 billion of Circle’s $40 billion USDC reserves are held by SVB.
However, USDC is nearly back at $1 after the Federal Reserve confirmed that all customer deposits at Signature Bank and SVB would be made in “whole.”
Related: US Fed announces $25B in funding to backstop banks
Another prominent crypto-bank, Silvergate Bank, announced last week that it would shut down and voluntarily liquidate “in light of recent industry and regulatory developments.”
Shortly after, Gensler wrote a March 9 opinion piece for The Hill that threatened U.S. crypto companies to “do their work within the bounds of the law” or be met with enforcement action.
As Chair of @SECGov, I have one goal with regard to the crypto markets: to ensure that investors and the markets receive all the protections that they would in any other securities market. How?
Read my op-ed in @thehill:
— Gary Gensler (@GaryGensler) March 9, 2023