March 21, 2023 13:04 Last updated: 13:12
Silicon Valley Bank (SVB) and Singnature Bank have been ordered to close and taken over by US regulators in recent days, creating the biggest bank failure in the US since the financial tsunami of 2008. For small and medium-sized banks in the United States, the nightmare caused by the incident is not over yet.
Silicon Valley bank failures trigger massive deposit flows. AP photos
The FDIC was named receiver after Silicon Valley Bank closed, and Silicon Valley Bridge Bank was created last Monday. All of Silicon Valley Bank’s insured and uninsured deposits, substantially all of its assets and all applicable financial contracts have been transferred to the newly created bridge bank. Depositors have full access to all funds through the 17 branches, and loan customers should continue to make repayments as normal.
Despite the intervention of the authorities, many depositors worried about deposits in small and medium-sized regional banks rushed to transfer deposits to large US banks, especially some depositors whose deposits exceeded the Deposit Insurance Corporation’s $250,000 guarantee limit Federal (FDIC). deposit flow in the United States in more than 10 years.
According to Bloomberg News, a research report shows that a total of 186 banks in the United States have risks similar to Silicon Valley Bank. Even if only half of them experience a run, the Federal Deposit Insurance Corporation will have difficulty providing enough money. at that time, 300 billion US dollars will be secured Federal savings insured deposits are at risk.
The report also revealed that the Federation of Midsize Banks, an industry body representing medium-sized US banks, called on the Federal Deposit Insurance Corporation to provide deposit insurance for all deposits within the next two years, saying that a measure of ‘such will “immediately stop the outflow of deposits from small banks.” “, promote banking stability and restore confidence.
WASHINGTON (Reuters) – U.S. Treasury Department officials are examining whether federal regulators have enough emergency authority to cover temporary deposits above the current $250,000 limit for most accounts without formal approval from Congress that has been deeply divided, people familiar with the matter said.
However, authorities have not seen the move as necessary, especially after regulators took steps this month to assist banks with any withdrawal requests, the person said. However, officers are still conducting due diligence and developing strategies to prevent the situation from escalating.
Bloomberg quoted people familiar with the matter on the 19th as saying that in the past week the Biden administration has communicated with the famous American investor Buffett many times about the current “regional banking crisis” in the United States, focusing on the possibility of Buffett. invest in regional banks in the United States in some way. Possibilities, while Buffett also presents analyzes and suggestions on the current crisis. Before that, Buffett had a precedent of helping out in the banking crisis. In 2008 and 2011, he gave financial support to Goldman Sachs and Bank of America, which were in deep crisis.
Some analysts said that to avoid running into political difficulties, the Biden administration hopes to defuse the crisis without using taxpayer money. US regulators have welcomed the fact that some of the largest US banks have provided a total of $30 billion in liquidity to troubled First Republic over the past week. The analysis believes that the “abacus” of the Biden administration is to ask Buffett to provide support, so that the government cannot implement direct support.
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