U.S. - The U.S. The banking system is facing unprecedented turmoil as two of its largest banks, Silicon Valley Bank and Signature Bank, have collapsed within days of each other. Silicon Valley Bank was a major lender for the tech industry, while Signature Bank was one of the few banks accepting cryptocurrency deposits. Both banks had deposits above the FDIC's $250,000 limit per account and the FDIC moved to use emergency measures to guarantee depositors at both banks, drawn from the Deposit Insurance Fund.
The federal government quickly responded to the banking crisis by insuring depositors with more than $200 billion in venture capital and start-up money, without using taxpayer money. The FDIC will use funds from its deposit insurance fund to ensure that all depositors are being made whole, while the Federal Reserve has also announced a bank term funding program, offering loans of up to one year to banks, credit unions and other depository institutions.
The failure of Silicon Valley Bank and Signature Bank has been linked to changes made to the Economic Growth, Regulatory Relief and Consumer Protection Act 2018, which exempted banks with $250 billion or less in assets from stringent stress testing and capital requirements. SVB and Signature Bank lobbied for the bill, claiming that they were not a systemic risk to the economy. When however, federal regulators intervened, they cited systemic risks to the banking system, raising concerns about the stability of the U.S. Banking System.
The failure of these two banks has sparked fears of a further financial meltdown. Other banks are now under intense scrutiny as their size and the nature of their assets could reveal heightened exposure or pose systemic risks to the financial system. President Biden has assured Americans that their deposits are safe and that no taxpayer money will be used to restore the deposits at Silicon Valley Bank and Signature Bank.