Depositor Bailouts to Come “at no Cost to The Taxpayer”, Says Biden
As the American public grappled with the overnight collapse of Silicon Valley Bank (SVB) and Signature Bank, concerns arose about the impact on depositors and taxpayers.
However, United States President Joe Biden sought to allay these fears, assuring citizens that the federal government would protect depositors and taxpayers from any adverse effects.
Thanks to actions we've taken over the past few days to protect depositors from Silicon Valley and Signature Banks, Americans can have confidence that our system is safe.
People’s deposits will be there when they need them – at no cost to the taxpayer.
— President Biden (@POTUS) March 13, 2023
Biden’s assurance to protect depositors
On March 12, Biden stated his commitment to holding those responsible accountable for the collapse of the two major traditional banks. The federal government’s proactive approach to minimizing damage was appreciated. Still, many pointed out that ultimately, it would be the taxpayers who would suffer from the depositors’ bailout.
Stablecoins depeg from USD
The collapse of the two major banks had broader implications, causing major stablecoins, such as USD Coin, USDD, and Dai, to depeg from the U.S. dollar.
Circle announced that $3.3 billion of its $40 billion reserves were stuck in SVB, which affected numerous other entities tied to the collapsing banks, leading to irreparable damage.
Biden commits to holding responsible parties accountable
The President sought to address these concerns and committed to holding responsible parties accountable for the events that triggered the banks’ collapse.
The U.S. Federal Reserve is closely investigating the factors that led to the failure of SVB, including how it supervised and regulated the now-collapsed financial institution.
Taxpayer concerns
Despite Biden’s assurance that taxpayers would not be burdened for saving SVB and Signature Bank depositors, many expressed concerns on social media that this may not be the case and does not make sense. While the federal government’s intervention was proactive in minimizing damage, some were skeptical about the ultimate cost to taxpayers.
Federal Reserve investigates SVB failure
The Federal Reserve is closely investigating the factors that led to SVB’s failure, including liquidity troubles relating to significant losses on government bond investments and unprecedented cash withdrawals.
@federalreserve announces that Vice Chair for Supervision Michael S. Barr is leading a review of the supervision and regulation of Silicon Valley Bank, in light of its failure. The review will be publicly released by May 1: https://t.co/wQ39KLiwHE
— Federal Reserve (@federalreserve) March 13, 2023
The investigations will shed more light on the reasons behind the collapse of the two traditional banks, providing a better understanding of what went wrong and how to prevent similar occurrences in the future.
Andrey Kunev
Reporter at CoinsPress
Andrey Kunev is a knowledgeable cryptocurrency content creator passionate about the crypto market. With extensive experience in market analysis and investment reporting, Andrey is a valuable asset to the CoinsPress team. As a frequent contributor, he offers insightful and comprehensive coverage of market trends, price fluctuations, and new advancements in cryptocurrency. Whether you're a seasoned investor or just getting started, Andrey's clear and concise writing offers a comprehensive look at the current state of the crypto market and its prospects. Stay up-to-date with CoinsPress's expert analysis and commentary on all things cryptocurrency.
