US regulators will protect all SVB deposits after sudden collapse


Federal regulators will safeguard all deposits at Silicon Valley Bank, including money that isn’t normally covered by federal deposit insurance, the Treasury Department announced Sunday evening, a rare and sweeping move designed to prevent the tech-focused bank’s rapid collapse from infecting the rest of the U.S. financial system.
Employees stand outside of the shuttered Silicon Valley Bank (SVB) headquarters. Image: Getty

Account holders will be able to access all of their deposits on Monday, the Treasury, Federal Reserve and Federal Deposit Insurance Corporation said in a joint statement.

The FDIC usually only insures $250,000 per account, but it can use its funds to protect uninsured deposits if the Treasury Secretary and two-thirds of the FDIC and Federal Reserve boards determine there is a “systemic risk” to the financial system—a strategy that federal officials appeared to pursue Sunday evening.

Taxpayers will not foot the bill for the rescue plan: The banks that fund the deposit insurance system will pay for any losses incurred from protecting Silicon Valley Bank’s uninsured depositors, with the FDIC charging them a “special assessment,” according to the Treasury.

The bank’s shareholders and “certain unsecured debtholders” won’t get federal protection, and its senior management staff are no longer in place.

The Federal Reserve is also creating a lending program for financial institutions impacted by Silicon Valley Bank’s failure, a move it said “will bolster the capacity of the banking system to safeguard deposits and ensure the ongoing provision of money and credit to the economy.”


Signature Bank—a New York-based bank that previously focused on cryptocurrency—was also shut down by state regulators, marking the second crypto-friendly financial institution to fail in recent weeks, after Silvergate Bank. The Treasury said “all depositors of this institution will be made whole” through a program similar to Silicon Valley Bank’s rescue package.

What We Don’t Know

Whether federal officials will find a buyer for Silicon Valley Bank, which Sen. Mark Warner (D-Va.) from the Senate Finance Committee called “the best outcome.” Bloomberg reported bids were due Sunday afternoon.

Big Number

$151.6 billion. That’s the total amount of uninsured U.S. deposits held by Silicon Valley Bank, making up the vast majority of the bank’s deposits as of December, according to FDIC filings.

Key Background

Silicon Valley Bank was one of the 20 largest banks in the country before it crashed Friday, following a bank run that came after the Federal Reserve’s interest rate hikes hurt the value of its assets and caused depositors to withdraw funds. Its demise marks the biggest bank failure in the U.S. since the 2008 financial crisis. Many of the bank’s clients were tech startups, and its failure impacted the already hurting industry.

Amid fears the crash could create issues at other financial institutions, Yellen said Sunday that a bailout of the bank’s investors isn’t necessary, in part because this situation is less severe than the Great Recession. “The American banking system is really safe and capitalised, it’s resilient,” she said.

This story was first published on and all figures are in USD.

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