The banking sector remained in focus Monday after regulators swooped in over the weekend to avert a contagion crisis following Friday’s news that Silicon Valley Bank, which services many large technology companies, start-ups and venture capitalists, collapsed. The regional bank owned by SVB Financial Group (SIVB(opens in new tab)) was closed last week by the California Department of Financial Protection and Innovation.
Adding to the banking bedlam, Signature Bank (SBNY(opens in new tab)), a New York-based regional lender focused on the cryptocurrency market, was also shuttered by regulators over the weekend. This came after customers rushed to withdraw deposits from the bank, and officials deemed it a systemic risk to the financial system.
U.S. banking regulators from the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve and the Treasury Department quickly came together over the weekend to develop a plan to limit risk to the banking sector. The efforts included covering all deposits for customers of the failed banks. The Federal Reserve also created the Bank Term Funding Program, a new emergency initiative that will offer short-term loans to banks, credit unions and other depository institutions in order to “provide an additional source of liquidity against high-quality securities, eliminating an institution’s need to quickly sell those securities in times of stress.”