President Biden promises to hold accountable those who caused SVB and Signature collapse

Updated: 13 March 2023

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Recently, several US banks have collapsed as economic difficulties continue to ravage the financial industry. Only a day after the fall of Silvergate Bank, the Silicon Valley Bank (SVB) also collapsed, and following it, Signature Bank did, as well.

As the situation started becoming more and more concerning for investors and business partners of these financial institutions, US President Joe Biden himself decided to address the situation. In his recent tweet, Biden vowed to hold accountable those responsible for the failure of the banks. At the same time, he has taken the opportunity to assure Americans that their deposits are safe.

Another US bank collapses over the weekend

The collapse of Signature Bank is the most recent of the three, taking place over the weekend. The New York District of Financial Services reacted on March 12th, taking possession of the bank. The US Fed commented on the move, stating that the crypto-friendly bank was shut down to protect the US economy. Apart from that, the goal was also to strengthen the public confidence in the banking system, which has recently started failing.

In addition, the Fed also announced a $25 million fund meant to be used for backstopping some of the banks that might be facing a liquidity crisis these days, and in the future.

The US president decided to address the matter himself, using his Twitter account to announce that he is pleased that the agencies have managed to reach a solution that would protect small businesses, workers, and other taxpayers who contribute to the financial system of the country.

At my direction, @SecYellen and my National Economic Council Director worked with banking regulators to address problems at Silicon Valley Bank and Signature Bank.

I’m pleased they reached a solution that protects workers, small businesses, taxpayers, and our financial system. https://t.co/CxcdvLVP6l

— President Biden (@POTUS) March 13, 2023

US regulators’ efforts to re-establish order are starting to work

Biden further said that he is committed to holding those responsible for the incidents fully acountable, noting that he plans to say more when he addresses the matter again later today, March 13th.

A number of other politicians in the country have also praised the Fed’s actions meant to stem contagion from the recent string of bank collapses. Some examples include US Senator Sherrod Brown, as well as Representative Maxine Waters. They both said that they are pleased to see that insured and uninsured SVB depositors would be covered equally.

Silicon Valley Bank depositors, both insured & uninsured, will be made whole by the plan from the FDIC, the Federal Reserve, the Treasury & the White House. And the Fed has created a new facility to support all banks that need liquidity to ensure our banking system is safe.

— Maxine Waters (@RepMaxineWaters) March 13, 2023

The US Senate Banking and Housing Committee stated on March 12 that “Today’s actions will enable workers to receive their paychecks and for small businesses to survive while providing depository institutions with more liquidity options to weather the storm.” The statement continued by adding that it urges the regulators to keep the banking system stable. Meanwhile, all of the factors contributing to these events will be recorded, and the regulators will be able to use them to determine how to improve the guardrails for the largest banks moving forward.

The US SEC Chair Gary Gensler also said that the regulator would double down in its pursuit of any wrongdoers, although he did not reveal any names or particular industries.

It is also worth noting that the collapse of SVB led to the revelation that Circle, the USDC issuer, had $3.3 billion out of its total $40 billion with the SVB, which led to criticism, and the unpegging of USDC from the USD. However, as the Fed confirmed that all deposits will be returned to their rightful owners, the stablecoin managed to return to the price of $1 per coin.

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