Feds Move to Protect All Silicon Valley Bank Customers
Still on the Silicon Valley Bank trend. The latest report that made it to the public scene says the Feds are out to protect all the banks’ depositors. This is coming a few hours before the Asian trade opens for trading.
Reports say that the intention by the United States regulator to protect the bank’s depositors is a way of preventing a wide panic, which also can disrupt the global finance industry. From the information available on this development, it is said that the United States regulators are targeting uninsured accounts in that bank.
In one of the official statements issued by the regulators, they suggested that most problems of failed banks are resolved by selling them to a reliable firm. Experts believe this statement is an excuse for not adopting a bailout option.
And as of this report, the Federal Deposit Insurance Corporation (FDIC) has been reported to have already started the process of auctioning Silicon Valley Bank. And it will be over by 2 P.M. EST. This was approximately 6 hours before trading commenced in Tokyo and Shanghai. Analysts say that will be the moment most investors will start feeling the impact of the failed bank.
The Implication of Feds Intervention
According to an anonymous source who commented on this development, Feds will be offering what they termed a ‘backstop’ for every uninsured account at the bank. Different sources familiar with this trend have revealed that the approach taken by Feds cannot be considered a bailout.
This won’t be a surprise, though, because the United States Treasury Secretary, Yellen Janet, had previously ruled out the possibility of a bail-out by the government, sighting some reasons that led to such a decision. One of the reasons she (Yellen) gave during her interview with journalists was that such a move would compel the government to tamper with funds not meant for such a purpose.
Recall that before this ugly change of events in the bank was announced on Friday, Silicon Valley Bank was once named the 20th best bank in the United States. Reports say that regulators have placed the bank under the Federal Deposit Insurance Corporation (FDIC) management until the process of creating a new identity is completed.
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