Silicon Valley Bank’s Uninsured Depositors Bailed Out. Crypto Signature Bank Shut Down, All Depositors Bailed Out. Senior Execs Fired. All Shareholders, Some Bondholders Bailed In, by Wolf Richter

Was there ever a doubt that there would be a bailout? From Wolf Richter at wolfstreet.com:

Treasury/Fed/FDIC issue joint statement with Tough Love for investors in failed banks.

We started hearing this yesterday from “sources” cited by Bloomberg. And this morning, Secretary of the Treasury Janet Yellen got on TV and repeated the general principle, without details. Now we got it officially, in a joint announcement by Yellen, Fed Chair Jerome Powell, and FDIC Chairman Martin Gruenberg. The bailout of uninsured depositors has arrived, so now all depositors of Silicon Valley Bank and Signature Bank, which was shut down today, will be made whole, not just insured depositors. The banks that are still standing can borrow from the Fed under a new facility. But investors in failed banks are on their own.

“After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors. Depositors will have access to all of their money starting Monday, March 13,” the statement said.

The Fed will pay for it at first. The Fed will print the needed funds to cover the deposits and give it to the FDIC (and the proceeds from asset sales will chip in to cover the losses). “No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.”

Later, the FDIC will charge other banks for those losses it incurred from bailing out uninsured depositors. And maybe the Fed will eventually get is money back from the FDIC? The statement said: “Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.”

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