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Government Plan to Protect SVB and Signature Bank Depositors Announced [1]
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Date: 2023-03-12
News from several sources (like this, this and this) late Sunday that the government is stepping in with a plan to fully protect all depositors of SVB and Signature Bank (which also failed on Sunday). This isn’t just the $250,000 of FDIC insurance — all depositors’ money will be protected (e.g., up to many millions of dollars, if that was what a person or company had on deposit).
Doesn’t really appear to be a taxpayer bailout — the funding will effectively come from other banks. Shareholders and creditors of the two failed banks will basically be wiped out.
This makes sense to me because the people and companies being rescued were just depositors. They weren’t taking any more risk than just depositing their money in a bank account, like we all do.
This action will hopefully stop contagion from spreading, and stop a multitude of startup companies from abruptly going out of business due to a sudden liquidity crunch. I’d call this good news.
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[1] Url:
https://www.dailykos.com/stories/2023/3/12/2157736/-Government-Plan-to-Protect-SVB-and-Other-Depositors
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