Biden Vows to Hold Those Responsible for Silicon Valley Bank and Signature Bank Collapse Accountable
In recent days, the failure of three major crypto-backing banks, including Silicon Valley Bank (SVB), Signature Bank, and Silvergate Bank, has caused concern for the stability of the crypto industry.
In response, the President of the United States, Joe Biden, has vowed to hold those responsible for the failure of these banks accountable.
On March 12, the New York District of Financial Services took possession of Signature Bank. The Federal Reserve announced that the crypto-friendly bank was closed to protect the U.S. economy and strengthen public confidence in the banking system. The Fed also announced a $25 million fund aimed at backstopping certain banks that could face liquidity issues in the future.
Biden tweeted to his 29.9 million followers on March 13 that he is “firmly committed” to holding those responsible for the failure of these banks “fully accountable.”
At my direction, @SecYellen and my National Economic Council Director worked with banking regulators to address problems at Silicon Valley Bank and Signature Bank.
I’m pleased they reached a solution that protects workers, small businesses, taxpayers, and our financial system. https://t.co/CxcdvLVP6l
— President Biden (@POTUS) March 13, 2023
Political praise for recent federal regulator actions
A host of other United States politicians have also shared praise over the recent federal regulator actions aimed at stemming contagion from the current banking collapses. U.S. Senator Sherrod Brown and Representative Maxine Waters said they were also pleased to see that both insured and uninsured SVB depositors would be covered, according to a March 12 statement by the U.S. Senate Banking and Housing Committee.
The statement added:
“As we work to better understand all of the factors that contributed to the events of the last several days and how to strengthen guardrails for the largest banks, we urge financial regulators to ensure the banking system remains stable, strong, and resilient, and depositors’ money is safe.”
SEC Chairman doubles down on pursuit of wrongdoers
Meanwhile, U.S. Securities Exchange Commission Chairman Gary Gensler has used the moment to double down on his agency’s pursuit of wrongdoers without naming any industries in particular. The chairman reinforced that the SEC would be on the lookout for violators of U.S. securities laws in a March 12 statement.
“Without speaking to any individual entity or person, we will investigate and bring enforcement actions if we find violations of the federal securities laws,” the SEC chairman added.
The shuttering of SVB temporarily triggered the depegging of Circle’s USD Coin to as low as $0.88 on March 11, as $3.3 billion of Circle’s $40 billion USDC reserves are held by SVB. However, USDC is nearly back at $1 after the Federal Reserve confirmed that all customer deposits at Signature Bank and SVB would be “made whole.”
Silvergate Bank announced last week that it would shut down and voluntarily liquidate “in light of recent industry and regulatory developments.”
Concerns about stablecoins and banks lead to Binance CEO’s recovery fund conversion
The concerns surrounding the failure of banks and stablecoins have led Binance CEO and co-founder Changpeng (CZ) Zhao to announce the conversion of the company’s recovery fund. The fund, originally in BUSD, will now be converted to “native cryptos” such as Bitcoin, Binance Coin, and Ethereum.
The depegging of stablecoins, including BUSD, DAI, USDD, and FRAX, caused concern among crypto community members. CZ’s decision to convert the recovery fund from BUSD to “native cryptos” drew mixed reactions from Twitter users.