President Joe Biden has now officially delivered public remarks about the
“Americans can have confidence that the banking system is safe,” Biden
Biden echoed the guarantee that the Treasury Department, Federal Reserve and FDIC made on
In addition, the president said that the money for depositors would not be funded by the taxpayer.
“No losses will be born by the taxpayers,” he said. “Instead the money will come from the fees that banks pay into the Deposit Insurance Fund.”
As for bank shareholders and investors, Biden emphasized that there would be no bailout for them.
“Investors in the banks will not be protected,” the president said. “They knowingly took a risk and when the risk didn’t pay off, investors lose their money. That’s how capitalism works.”
Silicon Valley Bank’s issues began after announcing the company needed to raise billions of dollars in capital on Wednesday. The announcement caused panic in the tech industry. Founders and VCs who were customers of the bank eventually sparked a bank run with tens of billions of dollars being withdrawn from the bank.
Biden offered a stark contrast to the apocalyptic scenarios that some tech VCs were posting about on social media over the past few days.
“Where is Powell? Where is Yellen?” venture capitalist and Elon Musk associate David Sacks
“YOU SHOULD BE ABSOLUTELY TERRIFIED RIGHT NOW — THAT IS THE PROPER REACTION TO A BANK RUN & CONTAGION,”
Silvergate, Signature Bank collapse not a sign of ‘contagion’
Some pointed to recent bank closures like
However, Silvergate shut down days before Silicon Valley Bank. In addition, both Silvergate and Signature Bank had well-known, lingering issues for months related to the cryptocurrency-friendly nature of those two now-failed banks. And, according to Biden, depositors from those banks will be made whole as well.
Bank stocks plunged on the market on Monday. However, some of the hardest hit on the stock market, like First Republic Bank, told
While the dust has far from settled, one thing we haven’t seen: Everyday Americans lining up at their local banks, trying to withdraw all of their money as some VCs warned.
According to the Federal Reserve, the