Signature and SVB Collapsed with a Risk of Bank Run

By Shubhendra Anand, 03 April, 2023

After the Silicon Valley Bank (SVB) and Signature Bank collapsed, in order to strengthen public confidence in the banking sector the regulators are guaranteeing all the bank’s depositors that they are fully protected.

According to the statement published, the Department of the Treasury, the FDIC and the Federal Reserve announced that the depositors would have all the access to all their money on Monday, since the statement came on Sunday. And the deposits more than $250,000 limit will be insured by the FDIC. The same guarantees are offered to the customers of Signature Bank also.

The collapse of Silicon Valley Bank was shuttered recently in March 2023, it is the second-largest bank failure ever in the U.S. after the self -declared “financial partner of the innovation economy” announced plans to raise capitals and sale of its substantial share for its securities portfolio. And ultimately this de-facto admission of mess has triggered a run on the bank’s which resulted in its downfall. SVB generally used to cater to startups and other companies and not the private customers, and majority of them exceeded $250,000 limit for the FDIC insurance. It implies they were partly unprotected. According to the reports, the depositors took $42 billion in withdrawals a day before the incident took place which ultimately led to the collapse of the bank.

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