US Government Intervenes to Ensure Customers of Failed Banks Have Access to All of Their Money

The US government has intervened over the weekend to ensure that customers of Silicon Valley Bank (SVB) and Signature Bank, which both failed this week, will have access to all of their money starting Monday, March 13. Gary Cohn, vice chairman of IBM and director of the National Economic Council under the Trump administration, told CBS Mornings that the failure of the banks was caused by a “classic bank run,” where people got scared about a bank’s ability to return depositors’ money and depositors wanted their money out.

The Federal Deposit Insurance Corporation (FDIC) has created a “bridge bank” for SVB deposits and another for Signature Bank deposits. This will allow customers to access both their insured and uninsured deposits. Customers will have full access to all of their money on deposit, as electronic banking is the norm and people can easily and quickly withdraw funds at the touch of a button.

The historic bank failures have raised questions about the stability of the banking system and whether taxpayers will bear the losses related to SVB’s collapse. However, the US government has assured that losses related to SVB’s collapse will not be borne by taxpayers.

Cohn said that a bank run in the present day looks different from what we might expect. “Today, a bank run happens on your telephone,” he said. “And automatically they can take all the money out of the bank.” It is hoped that the government’s intervention will help to restore confidence in the banking system and ensure that customers have access to their money.