US acts to shore up confidence in banking system
STORY: The sudden collapse of Silicon Valley Bank has been met with an emergency response by U.S. authorities to try and head off contagion after the largest bank failure since 2008.
In a move to shore up confidence in the banking system the Biden administration stepped in on Sunday to protect deposits in the failed bank.
Regulators said customers will have full access to deposits starting Monday - which include billions of dollars in uninsured money - and set up a new facility to give banks access to emergency funds.
Silicon Valley Bank was key lender in the start-up economy a product of the decades-long era of cheap money, with unique risks that made it especially vulnerable.
The bank's collapse on Friday sparked panic at the weekend over whether small-business clients would be able to pay their staff, with the FDIC only protecting deposits of up to $250,000.
On Sunday, regulators closed another bank under pressure - New York's Signature Bank.
Gerard Comizio, a professor at American University, said both events would spark political fallout.
"But the idea that you had two bank failures, including one that is the second largest bank failure in history, there's going to be some blowback from this and I fully expect that there'll be congressional hearings on these failures, both of them."
The U.S. Treasury, Federal Reserve, and Federal Deposit Insurance Corporation, said in a statement that all depositors will be made whole in both Silicon Valley Bank and Signature Bank, at no loss to the taxpayer.
And a Sunday statement from President Joe Biden said, quote, "I am firmly committed to holding those responsible for this mess fully accountable."
He is set to address the intervention, and the threat of a broader crisis in remarks on Monday.