On Friday, American politicians met with the Federal Reserve and the Federal Deposit Insurance Corporation to address Silicon Valley Bank’s demise (SVB).
Late in the day, hours after the California Department of Financial Protection and Innovation took control of the bank and turned it over to the FDIC, Rep. Maxine Waters (D-Calif.) conducted briefings with representatives from the two federal bank regulators as well as the Treasury Department. According to a person familiar, legislators from both major political parties attended the discussions with regulators.
Once SVB fell earlier on Friday, a number of politicians, including Waters, raised concern.
She issued a statement in which she stated, “I am disturbed by the failure of Silicon Valley Bank, which represents the second greatest bank failure in U.S. history. “In order for myself and the members of the Committee to understand the most recent developments surrounding the closure of Silicon Valley Bank (SVB) by the California Department of Financial Protection and Innovation (DFPI) and the appointment of the Federal Deposit Insurance Corporation (FDIC) as receiver, I am closely monitoring the situation and convening Committee members with regulators. I thank the DFPI and the FDIC for acting swiftly today, and I continue to have faith in the stability of the American financial system and the capacity of our regulators to safeguard investors and consumers.”
Many California legislators tweeted that they were also keeping an eye on the issue. One major question is whether depositors would receive any of their money above the $250,000 per account FDIC cap.
A receivership certificate and an advance dividend would be given to uninsured depositors, according to a statement from the FDIC.
Payroll issues may arise for businesses that banked at SVB, and cheques or wire transfers made just before the bank failed may not clear.
Rep. Eric Swalwell (D-Calif.) tweeted that he was discussing this matter with other members.
“Any deposits in excess of the FDIC’s $250k cap must be honoured, thus we must ensure this. Banking is all about trust. We will have problems if depositors lose faith in the security of their accounts of more than $250,000 “said he.
According to a statement from the department, Treasury Secretary Janet Yellen has also met with bank regulators from the Fed, FDIC, and Office of the Comptroller of the Currency.
The statement read, “Secretary Yellen expressed full confidence in banking regulators to take necessary actions in response and underlined that the financial system remains robust and regulators have adequate instruments to address this type of situation.
