Biden insists banking system is safe after two bank failures

International regulators also had to step in to allay investor fears. The Bank of England and Britain’s Treasury said they facilitated the sale of a subsidiary of Silicon Valley Bank in London to HSBC, Europe’s largest bank. The deal protected £6.7 billion ($12.2 billion) in deposits.

Under the plan announced by US regulators, depositors at Silicon Valley Bank and Signature Bank, including those whose holdings exceed the $250,000 insurance limit, will be able to access their funds on Monday. Under a new Fed program, banks can post these securities as collateral and borrow from the emergency facility.

The Treasury has set aside $25 billion to cover any losses. But Fed officials said they anticipate not having to use that money because the securities pledged as collateral have very little risk of default.

New York’s banking regulators took possession of Signature Bank on Sunday, ousted its leaders and turned over day-to-day control to the FDIC as part of a move in which the federal government agreed to guarantee full deposits — even those over $250. 000 threshold.

New York Gov. Kathy Hochul described the State Department of Financial Services’ decision as a goal to avert a larger crisis involving more banks.

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“We wanted to make sure that the entire banking community here in New York is stable, that we can project calm,” Hochul said in a news conference on Monday.

She said a high volume of withdrawals that began last week continued with online transactions into the weekend. The bank remained open on Monday.

Founded more than two decades ago, Signature has about 40 offices across the country and says it focuses on banking for private companies, their owners and senior managers.

Although Sunday’s moves represented the largest government intervention in the banking system since the 2008 financial crisis, the measures were relatively limited compared to 15 years ago.

The two failed banks themselves were not bailed out, and no tax money was made available to them.

Some prominent Silicon Valley executives feared that if Washington didn’t bail out their failed bank, customers would attack other financial institutions in the coming days. Share prices of other banks geared towards tech companies, such as First Republic and PacWest Bank, have plummeted in recent days.

The bank’s clients include a range of companies, including many California wineries that rely on Silicon Valley Bank for loans and tech startups committed to fighting climate change.

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Tiffany Dufu, founder and CEO of The Cru, a New York-based women’s career coaching platform and community, posted a video on LinkedIn from an airport restroom on Sunday, saying the banking crisis has tested her resilience placed.

With her money tied up at Silicon Valley Bank, she had to pay her employees from her personal bank account. Assisting with two teenagers who will be going to college, she said she was relieved to hear the government’s intention was to make savers healthy.

“Small companies and early stage start-ups don’t have much access to leverage in a situation like this and we often find ourselves in a very vulnerable position, especially when we have to fight so hard to get the wires into your bank especially for to consider me as a black founder,” Dufu said.

AP