The United States regulators on Sunday night cleared a plan for the Silicon Valley Bank (SVB) to protect depositors and assured that no losses would be borne by the taxpayers. The Joe Biden administration announced that depositors of the SVB will have access to their money from Monday.

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“The depositors will have access to all their money starting Monday, that is, March 13. No losses associated with the resolution of the Silicon Valley Bank (SVB) will be borne by the taxpayer,” said a joint statement issued by the Department of the Treasury, Federal Reserve, and FDIC.

They said that a similar systemic risk exception was being announced for Signature Bank, New York, which was closed on Sunday by its state chartering authority. All depositors of this institution will be made whole, they said.

However, Signature shareholders and certain unsecured debt holders will not be protected. Also, the Federal Reserve Board will make additional funding to eligible depository institutions.

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"This step will ensure that the US banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth," the statement noted.

According to the statement, the United States banking system remains resilient and on a solid foundation, in large part due to reforms that were made after the financial crisis that ensured better safeguards for the banking industry.

Meanwhile, US President Joe Biden has committed to holding those responsible for this “mess fully accountable” and to continuing efforts to strengthen oversight and regulation of larger banks so that the economy is not in this position again.

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“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,” President Biden tweeted.

He added that the American people and American businesses can have confidence that their bank deposits will be there when they need them.

The remarks come as the Federal Deposit Insurance Corporation seized the assets of Silicon Valley Bank on Friday, marking the largest bank failure since Washington Mutual during the height of the 2008 financial crisis.

The FDIC ordered the closure of Silicon Valley Bank and immediately took the position of all deposits at the bank. The bank had $209 billion in assets and $175.4 billion in deposits at the time of failure, the FDIC said in a statement. It was unclear how much of the deposits was above the $250,000 insurance limit at the moment.

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Silicon Valley was heavily exposed to the tech industry. The financial health of the lender was increasingly in question last week after the bank announced plans to raise up to $1.75 billion in order to strengthen its capital position amid concerns about higher interest rates and the economy.

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First Published:Mar 13, 2023 7:33 AM IST