Federal regulators said Sunday that it was taking emergency measures to prevent contagion at other small and regional banks in the wake of Silicon Valley Bank's sudden implosion.
Deposits at Signature Bank, which was shut by New York regulators on Sunday, would also be backstopped.
U.S. Treasury Secretary Janet Yellen takes her seat as she arrives for a House Ways and Means Committee hearing on Capitol Hill in Washington, D.C., on March 10, 2023. On Sunday, the Treasury Department and other financial regulators including the Federal Reserve, announced emergency measures to protect depositors at Silicon Valley Bank and Signature Bank.
A notice informing of Silicon Valley Bank's closure hangs at the bank's headquarters in Santa Clara, California on March 10, 2023. The bank suffered a swift demise after fears of its financial health led to a rush of depositors looking to withdraw their funds.The move on Sunday effectively waives the $250,000 ceiling on federal deposit insurance for Silicon Valley Bank and Signature Bank.
"Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system," the officials said on Sunday.The rapid meltdown of Silicon Valley Bank happened at a stunning pace, as did the government's response. The value of those securities began to drop after the Federal Reserve started raising interest rates aggressively to fight inflation.
The announcement of the bond sale sparked more depositors to pull out their funds, effectively leading to a run on the bank.
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