Bankruptcies: Biden Demands Stricter Rules

US President Joe Biden has called for tightening rules for US banks following the collapse of California’s Silicon Valley Bank (SVB) and Signature Bank. He wants to ask Congress and regulators to do so, Biden said in Washington. It must be avoided that something like this happens again.

The US government reacted quickly. US citizens could therefore trust in the security of the banking system. “Your insoles will be there when you need them,” he continued. At the same time, Biden assured that the country’s taxpayers would not have to answer for losses related to the bankruptcy of the banks. A deposit protection fund, into which all banks would pay, would pay for this.

Those responsible should be fired

Customers who had their money with Silicon Valley Bank and Signature Bank are protected and can access their savings starting today, Biden said. This also applies to small businesses. The investors behind the banks, on the other hand, would have to bear their losses themselves.

The US President also announced that those responsible in the financial institutions would be fired. “No one is above the law,” Biden said.

US government pledges to protect depositors

The US government had previously announced that all deposits at Silicon Valley Bank would be protected. Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell and the US deposit insurance company FDIC issued a joint statement saying all depositors would be fully protected and have access to all their money. A similar regulation also applies to the Signature Bank.

The Silicon Valley Bank, which specializes in start-up financing, was temporarily closed and placed under state control after a failed emergency capital increase. This caused unrest around the world. Other banks also came under considerable pressure on the stock exchange. The New York-based Signature Bank was also closed.