US President Joe Biden pledged to hold accountable those responsible for the failure of the Silicon Valley and Signature banks, saying: “I am deeply committed to holding those responsible for this mess accountable, and to continuing our efforts to strengthen oversight and regulation of major banks so that we do not find ourselves in this situation again.” .
For her part, US Treasury Secretary Janet Yellen confirmed that Washington is seeking to avoid the impact of the bankruptcy of the Silicon Valley Bank on the rest of the banking system, but it ruled out saving the institution by pumping public funds into it, in return, it confirmed the protection of all its deposits.
Economic analysts believe that it is difficult to know how far the current banking crisis may go, at a time when the matter depends on what the US government does to address it, and to ensure the protection of depositors’ money.
American moves
- Officials at the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Agency held an emergency meeting with the aim of finding a solution before opening Asian financial markets, according to the Washington Post.
- Officials sought to avoid panic in the financial markets and considered the possibility of protecting all unprotected deposits at SVB Bank.
- The government’s Deposit Insurance Agency has taken over a Silicon Valley bank that is on the brink of collapse under the influence of massive withdrawals from its depositors.
- Use of the FDIC’s Deposit Insurance Fund to cover depositors
- Many depositors are uninsured because of the $250,000 limit on secured deposits.
- “I’m sure the Deposit Insurance Agency is looking at a wide range of solutions, including a takeover” from another bank, the Chancellor of the Exchequer said.
- According to the new plan, depositors will have full access to their deposits as part of the multiple moves, starting Monday morning.
- To counter the risks, the Federal Reserve unveiled a new program that allows banks to borrow money backed by government securities to meet the demands of deposit customers.
How to secure deposits
For his part, the American economic analyst, Paul Sullivan, believes in an interview with “Sky News Arabia” that the government deposit insurance agency protects all bank deposits of up to $ 250,000 for each bank customer, adding: “This seems to be a huge amount, but This also applies to companies, and some companies put much more than $250,000 in banks that have collapsed.”
Regarding the details of how to secure these deposits, Sullivan explained that:
* The Government Deposit Insurance Agency is the federal institution that began in 1933 to restore confidence in the American banking system, where thousands of banks collapsed during the Great Depression
* This agency has succeeded greatly since then and has stabilized the financial system more than was the case before it
* The insurance limit was initially $2,500 per ownership class, and this has increased several times over the years
* This insurance applies only to deposits in the United States. Other countries have their own deposit insurance programs and will take similar measures in order to protect depositors.
* Any bank country that does not insure deposits will be at increased risk as financial systems operate through economic shocks in the recent past and future.
* US regulators took over Silicon Valley Bank and shut down Signature Bank, and the sooner this problem is brought under control, the better.
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