After the unprecedented fall of Silicon Valley Bank, the U.S. government took immediate action on Sunday to try to stop more bank instability.
It also told customers of the failed financial institution that they would soon be able to get all of their money back.
Only hours before trading started in Asia, the statement was made amid worries that the variables that affected the Santa Clara, California-based bank could spread.
Authorities spent the whole weekend trying to find a buyer for the bank or arrange for a different intervention, while all the while, another bank, Signature Bank, was closing.
All Silicon Valley Bank customers would be safeguarded and have access to their funds, the Treasury Department, Federal Reserve, and FDIC declared on Sunday. They also unveiled measures to protect the bank’s consumers and stop further robberies.
This action will guarantee that the American banking system continues to play its crucial functions in safeguarding deposits and granting credit to individuals and companies in a way that supports robust and stable economic growth.
On Friday, Silicon Valley Bank, a financial organization with over $200 billion in assets, faced a conventional run on the bank, in which depositors raced to take all their money at once. Authorities were forced to act quickly to liquidate the firm.
It is the second-largest bank failure in American history, trailing only Washington Mutual’s loss in 2008.
Some well-known Silicon Valley CEOs feared that if Washington didn’t save the failing bank, customers might start making runs on other financial institutions soon.
Several banks that do business with technology businesses, such as First Republic Bank and PacWest Bank, have seen stock prices plummet in recent days.
Many wineries in California that rely on Silicon Valley Bank for loans and technological businesses working to battle climate change are among the bank’s clients.
As of Friday, Sunrun, a firm that sells and rents solar energy equipment, had less than $80 million in cash deposited with Silicon Valley Bank. Sunrun stated in a statement that it anticipates having more information on the expected recovery in the coming week.
The well-known online retailer of clothing, Stitchfix, revealed in a recent quarterly report that it had a credit line with Silicon Valley Bank and other lenders for up to $100 million.