RICHMOND, Va. (WRIC) — Virginia Senator Mark Warner welcomed a move by the federal reserve and other major government authorities to guarantee the deposits of customers at two major banks that suddenly collapsed this week.
In a classic bank run, depositors — mostly cash-flush tech startups and not private individuals — rushed to withdraw their money from the Silicon Valley Bank earlier this week, triggering a collapse of the bank.
Under the FDIC, depositors are guaranteed at least $250,000 regardless of what happens to a bank — much more than the average American has in savings. But for the tech companies that used SVB, that limit is far below the amount they had on hand.
That’s why the Federal Reserve, FDIC and Treasury stepped in today to ensure that depositors would get their money back. But officials have been quick to point out that the move would not amount to a bailout for the bankers who ran SVB and Signature, a New York-based bank specializing in cryptocurrency that also collapsed.
Warner said the treasury and fed acted “swiftly and responsibly to protect depositors and make sure that our financial system remains stable, while at the same time making clear that bank shareholders and bondholders shouldn’t expect any kind of bailout by the taxpayers.”
