After the collapse of Silicon Valley Bank in March 2023, President Biden ordered the FDIC to take control of SVB and Signature Bank’s assets in order to protect the bank’s customers.
He announced that money covering the losses will come from the fees that banks paid into the Deposit Insurance Fund rather than American taxpayers’ dollars. The Deposit Insurance Fund is funded with quarterly fees assessed on financial institutions and interest on government bonds.
The FDIC and Department of Treasury stated that depositors of SVB are fully able to access their funds as a result of this action.
“That’s what swift action that my administration, over the past few years, is all about: protecting depositors, protecting the banking system, protecting the economic gains we have made together for the American people,” said Biden in a statement on March 13, 2023.
Nathan Frandino/Reuters
Industry Leaders and Elected Officials Praise Biden’s Quick Action
Elected officials praised Biden’s move to support a failing banking system, with Senator Alex Padilla and Representative Jimmy Panetta from California calling these actions by the Treasury, Federal Reserve, and FDIC “absolutely necessary” to upholding California’s economy.
Better Markets, a Washington financial watchdog, is among those who support the administration’s actions, with chief executive Dennis M. Kelleher praising the “important words and directives from the White House.”
“I am firmly committed to holding those responsible for this mess fully accountable,” said Biden, “and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again.”
Biden’s Plan to Revamp Bank Regulations
Much of the risk that caused this failure was a result of the Trump administration’s weakening of bank regulations for small and medium sized banks that had been implemented after the 2008 financial crisis.
Biden’s actions, such as reinstating these regulations and ordering annual stress tests, are ensuring that this mismanagement will not go unchecked in the future and that the economy and all Americans are protected.