The Silicon Valley Bank collapse is the second largest bank failure in U.S. history, behind only the 2008 failure of Washington Mutual.
4NEW YORK—President Joe Biden on Monday told Americans the nation’s financial systems were safe, seeking to project calm following the swift and stunning collapse of two banks that prompted fears of a broader upheaval.U.S. regulators closed the Silicon Valley Bank on Friday after it experienced a traditional bank run, where depositors rushed to withdraw their funds all at once. It is the second largest bank failure in U.S. history, behind only the 2008 failure of Washington Mutual.
Biden also said management of the banks should be fired. “If the bank is taken over by the FDIC, the people running the bank should not work there anymore,” he said, referring to the Federal Deposit Insurance Corp., the agency responsible for ensuring the stability of the banking system. In an effort to shore up confidence in the banking system, the Treasury Department, Federal Reserve and FDIC said Sunday that all Silicon Valley Bank clients would be protected and able to access their money.
Britain also moved quickly, working throughout the weekend to arrange the sale of Silicon Valley Bank UK Ltd., the California bank’s British arm, for the nominal sum of one pound. “When you have very young companies, very promising companies, they’re also fragile,” Hunt told reporters, explaining the why authorities moved so quickly. “They need to pay their staff and they were worried that as of 8 a.m. this morning, they might literally not be able to access their bank account.”Silicon Valley Bank began its slide into insolvency when it was forced to dump some of its treasuries at at a loss to fund its customers’ withdrawals.
Some prominent Silicon Valley executives feared that if Washington didn’t rescue their failed bank, customers would make runs on other financial institutions in the coming days. Stock prices plunged over the last few days at other banks that cater to technology companies, such as First Republic and PacWest Bank.
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