The US Administration has given a last-minute blow this Sunday to prevent the bankruptcy of Silicon Valley Bank last Friday from generating a crisis of confidence in the financial system. In a statement, the Federal Reserve, the Treasury Department and the regulatory body have announced that they will make additional funds available to guarantee the payment of all the institution’s deposits, both insured and uninsured.
“After receiving a recommendation from the boards of directors of the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC), and after consulting with the president (Joe Biden), Secretary (Janet) Yellen has given the go-ahead to measures that allow the FDIC to complete its management of Silicon Valley Bank of Santa Clara, California, so that all deposits are fully protected,” the statement said.
The SVB was handed over to the FDIC last Friday after its clients withdrew more than $42 billion in ten hours on Thursday, the largest outflow of deposits from a bank in recent US history. The great concern was what was going to happen to their deposits, which on December 31 reached 175,000 million dollars: regulatory bodies guarantee funds up to 250,000 dollars, but 96% of the deposits in the Californian bank exceeded that figure and did not they were guaranteed. Much of that money corresponded to companies in the technology sector, many of them startupswho needed those funds to meet their payments, including the payroll of their employees.
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