Regulators acted to shut down Signature Bank owing to “systemic risk” just a few days after Silicon Valley Bank went out of business. However, none of the bank’s shareholders will be able to recoup their losses, which will leave investors in the region with a gloomy outlook.
What we do know is this:
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The following is the joint statement from the Federal Reserve, FDIC, and Department of the Treasury:
Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system. This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth.
After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors. Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.
We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.
Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.
This is Twitter’s most recent update:
The financial system is “resilient,” according to the Federal Reserve:
This narrative is still in progress. Watch for more…
