U.S. regulators were had to intervene with a number of emergency measures following the failure of Silicon Valley Bank and Signature Bank, which threatened to spark a more serious crisis. President Joseph Biden responded by saying in a Monday speech at the White House that the US banking system was "secure" and promising to place stronger controls on banks.
Bank Managers Will Be Fired
The president's statement and the quick responses from regulators over the weekend appear to be an effort to halt further bank runs. The financial regulators in the US promised on Sunday to reimburse any deposits made by Silicon Valley and Signature Bank customers. Nonetheless, Biden emphasized that bank managers would be dismissed and investors would lose money, repeating assertions made over the weekend by his administration.
In his comment, Biden is reported to have said:
"They knowingly took a risk, and when the risk didn’t pay off his adjusters lose their money. That’s how capitalism works."
All deposits from Silicon Valley Bank have been transferred to a newly established bridge bank, according to a Monday announcement from the U.S. Federal Deposit Insurance Corporation. As a result, all account holders will have access to their money starting on Monday morning. This information was released just one day after the FDIC announced the closure of Silicon Valley Bank.
New Regulations for Increased Security?
Nevertheless, after the 2008 crisis, Biden seemed to introduce newer rules for the first time. In order to safeguard American employment and other small businesses, he declared that he will encourage Congress and regulators to enhance regulations to ensure that such scenarios are less likely to occur.
A California state regulator ordered the Silicon Valley Bank to lock its doors on Friday after the bank was unable to handle the rising demand for customer withdrawals. On the other hand, a NYDFS representative took control of Signature Bank on Sunday "to protect depositors."
Their preferred banking partners are Silicon Valley Bank and Signature Bank because they both work with businesses that deal in cryptocurrencies. The closure of both banks raises questions about how payments might be processed in the future for the larger crypto business. At the time of writing, Bitcoin was trading hands for $23,560, an increase of 14.77% over the previous 24 hours.