President Joe Biden made a public statement in order to assure all of the customers of Silicon Valley Bank and Signature Bank that their money is safe and this is supposedly insured by the Deposit Insurance Fund. However, Biden is saying that all of the investors will most likely not get the same guarantee.
“Investors in the banks will not be protected. They knowingly took a risk and when the risk didn’t pay off, the investors lose their money. That’s how capitalism works,” said Biden in a White House speech.
The nation’s top bank regulators announced that the Federal Deposit Insurance Corp. and Federal Reserve would be covering deposits at both failed banks as well as rely on Wall Street and large financial institutions to foot the bill, not taxpayers.
Signature Bank in New York, which was shattered on Sunday due to similar systemic contagion fears as SVB, has been a widely popular funding source for cryptocurrency companies.
“The FDIC on Friday took control of SVB’s assets and over the weekend Signature’s. All customers who had deposits in these banks can rest assured they will be protected and they’ll have access to the money as of today,” Biden said.
″No losses will be borne by the taxpayers. I’m going to repeat that -- no losses will be borne by the taxpayers. Instead the money will come from the fees that banks pay into the Deposit Insurance Fund.” Biden continued.
Additionally, according to a joint statement issued by the FDIC, Federal Reserve and Treasury Department, any losses experienced due to the Deposit Insurance Fund will be covered by various special assessments levied on federally insured banks.
“Americans can have confidence that the banking system is safe. Your deposits will be there when you need them,” Biden said.