The Federal Deposit Insurance Corporation (FDIC) announced that customers of Silicon Valley Bank (SVB) and Signature Bank (SBNY) can access funds during normal banking hours on Monday, March 13, 2023 The FDIC announced that deposits at both banks have been fully repaid in accordance with the Systemic Risk Exception approved by the Federal Reserve and the Department of the Treasury.
Details on the creation of a full-service FDIC-operated bridge bank
Customers of Silicon Valley Bank (SVB) and Signature Bank (SBNY) will have access to their funds beginning Monday, following the FDIC’s creation of both banks as new full-service FDIC-operated bridge banks.SVB will now be known as “” SVB will henceforth be known as ““. Silicon Valley Bank N.A.. Meanwhile, Signature’s new name is “Signature Bridge Bank N.A.. Both Bridge Banks are national banks operated by the FDIC with the goal of stabilizing financial institutions and ensuring orderly resolution.”
For both U.S. banks, depositors and borrowers can use ATMs, debit cards, online banking, and write checks as they did before the banks failed, and the FDIC advises loan customers to “continue making loan payments as usual.” Silicon Valley Bank (SVB) was the second largest bank failure in the U.S. after the 2008 Washington Mutual (Wamu) failure, while New York’s Signature Bank was the third largest bank failure in the U.S. While much information has been provided on why SVB failed, Signature Signature was the third largest bank to fail in the U.S. While much information is provided about why SVB failed, little information is provided about why Signature failed.
Signature reportedly posed “systemic risk” and New York regulators closed the bank “pursuant to Section 606 of the New York Banking Law to protect depositors.” However, Section 606 deals with obtaining approval from New York to transfer or close a bank while ensuring depositors’ access to their funds. Signature operates to maximize the eventual sale of the bank, and the FDIC has appointed Greg Carmichael as CEO of Signature Bridge Bank, N.A. Additionally, the U.S. banking organization appointed Tim Mayopoulos as CEO of Silicon Valley Bank, N.A.
Additionally, banking giant HSBC (LSE: HSBA) has agreed to acquire Silicon Valley Bank’s UK subsidiary for £1. Noel Quinn, HSBC CEO, said in a statement, “This acquisition makes excellent strategic sense for our business in the UK.”
What are your thoughts on what has happened with these two banks? Do you think it is an effective solution to stabilize and resolve the failed banks? Let us know your thoughts in the comments section below.
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